Northern Pulp seeking $2.5 billion in private-public funding to build new pulp mill

The Nova Scotia government has granted a five-week extension to Northern Pulp as the company works on a plan to build a new kraft paper mill on the province's southwestern shore four years after it was granted protection from its creditors. The Northern Pulp mill in Abercrombie Point, N.S., is viewed from Pictou, N.S., on Dec.13, 2019. THE CANADIAN PRESS/Andrew Vaughan

HALIFAX — Northern Pulp, the company behind a Nova Scotia mill that shut down four years ago amid environmental shortcomings, says it will cost $2.5 billion to build a new, cutting-edge plant on the province’s southwest shore.

But the company says the proposed project, which will require private and public funding, does not currently meet its required rate of profitability — and it wants until early May to secure financing.

“The company will use the extension period to continue working to identify … potential financing opportunities,” the company said in a statement released Monday. “The company will begin steps to prepare for a sales process of Northern Pulp’s assets if a new mill is not feasible.”

The insolvent company, owned by Paper Excellence Group in British Columbia, also said it will be asking a B.C. judge to extend its court-ordered protection from creditors during a court hearing on Friday.

On Monday night, the Nova Scotia government said that as a secured creditor, it would agree to a five-week extension to allow the company to continue working on its plans to build a bleached softwood kraft pulp mill and “bioproducts hub” near Liverpool, N.S.

Northern Pulp has been under creditor protection since June 2020 after it closed its kraft pulp mill in Nova Scotia’s Pictou County, eliminating 300 jobs and affecting another 2,000 positions in the forestry sector.

The government ordered the shutdown after Northern Pulp failed to meet the province’s environmental requirements for a new effluent treatment plant. At the time, the province’s Liberal government said the mill could no longer dump its waste into Boat Harbour near the Pictou Landing First Nation.

The province’s environment minister, Iain Rankin, had referred to Boat Harbour as one of the worst examples of environmental racism in Canada.

In May of last year, a settlement agreement was reached between the government and Paper Excellence, ending years of legal wrangling. Paper Excellence withdrew a $450-million lawsuit against the province and abandoned plans to reopen its idled mill.

The agreement says that if the company resumes operations elsewhere, it requires an internal rate of return of 14 per cent, which the B.C. court also approved.

Since then, the company has been working on a feasibility study for a new mill at or near the site of the former Bowater Mersey Paper Company, where Northern Pulp would also like to establish a bioproducts hub that would produce biogas and biochemicals used in food, pharmaceuticals and cosmetics. It is also looking into bioenergy initiatives and a pilot project for carbon capture and storage.

Provincial Natural Resources Minister Tory Rushton made it clear the government is eager to see these proposals succeed, saying a “new-era pulp mill” in Nova Scotia would be a game-changer.

When asked if the Nova Scotia government would help pay for the project, Rushton issued a statement Tuesday saying the government is helping Northern Pulp understand existing investment programs.

“This information was factored into the company’s assessment,” the statement said. “Other financial sources, including the federal government, would be essential to making this business plan successful.”

Under the agreement reached in May, the pensions of all former and current Northern Pulp employees will remain fully funded. As for the $99 million in loans Paper Excellence owes the government, repayment will depend on what happens with the company’s plans for the new mill.

If it goes ahead, the company will pay about $50 million to cover court costs, and $15 million will go to the province to settle debts. Another $30 million is earmarked for pension plans.

But if the proposal falls apart, the pension and creditor arrangements wouldn’t change, but the company will have to pay the province $30 million, and then spend $15 million on the cleanup of the old mill site.

This report by The Canadian Press was first published March 11, 2025.

By Michael MacDonald