Judge approves settlement agreement between N.S. government and Northern Pulp owner

A British Columbia Supreme Court judge has approved a settlement agreement between the Nova Scotia government and Paper Excellence, a move that officially kills the beleaguered Northern Pulp mill and kicks off the process to explore a new facility in the Liverpool area.

Justice Shelley Fitzpatrick signed off on the agreement following a hearing on Friday. The pact was reached following court-ordered, non-binding mediation led by former Supreme Court of Canada judge Thomas Cromwell.

In broad strokes, the agreement sees Paper Excellence end its efforts to restart the Northern Pulp mill in Abercrombie Point and drop all legal actions it was pursuing against the province, including a $450-million lawsuit for the premature end of its lease to use Boat Harbour as an effluent treatment site.

The deal also sees the company agree to pay $30 million to top up pension plans, something that had been in question since Northern Pulp entered creditor protection six months after it was forced to shut down in 2020.

As part of the agreement, Paper Excellence officials will begin a feasibility study, which could take up to nine months, examining whether it is financially viable to build a new bleach kraft pulp mill in the Liverpool area.

A key component for determining viability is whether a new mill can achieve a rate of return greater than 14 per cent.

The study is a linchpin to other outstanding questions, not the least of which is what a new mill in the Liverpool area would look like, where it would be located and whether it would produce the same kind of smell that frustrated people in Pictou County and surrounding areas for decades.

That study will also determine what happens with the Northern Pulp property in Abercrombie Point.

Should the study find that a new mill is financially viable, Paper Excellence would be required to maintain — but not clean up — the Northern Pulp property. The company would be able to use the Pictou County site to store logs and other materials that would eventually make their way to Liverpool.

Should a new operation in Liverpool not be viable, however, the company would be required to decommission and demolish the Northern Pulp mill, sell its Nova Scotia timberland to pay creditors and put $15 million toward a closure plan for the site. The actual cleanup bill for that property is believed to be much more than that and it's not clear who will pay it.

Premier Tim Houston and Environment Minister Tim Halman both told reporters on Thursday that they have not seen any recent information about the degree of contamination at the site, which was also once home to Canso Chemicals, and is known to contain mercury.

Houston also said he has not seen any recent cost estimates for cleaning up the site.

"What happens on the site and how much that will cost in the future, that won't really be known until the purpose of the site has been determined," he said.

"And let me assure you … that the environmental standards and the normal processes we have will be applied going forward to any future scenario."