POLITICS

Premier mum on update concerning future of struggling Nova Scotia paper mill

06/14/2012 12:03 EDT | Updated 08/14/2012 05:12 EDT
HALIFAX - Nova Scotia Premier Darrell Dexter suggested Thursday that there will be a development concerning the future of a struggling paper mill, days before it begins a temporary shutdown.

Dexter wouldn't reveal details when asked if the mill in Brooklyn was facing closure, but said the management of Resolute Forest Products (TSX:ABH) should be making a statement soon.

"It's up to them to talk to their workers and I understand that they will do that," he told reporters.

"There is no question that we are continuing to see an erosion in that market that is very difficult, but I think ultimately it will be up to the Resolute management to make and explain a decision."

A spokesman with Resolute did not return calls and emails Thursday.

Pat Roy, a vice-president with the Communication, Energy and Paperworkers Union of Canada, said he had not heard of any developments with the mill.

The plant, which is still known locally as the Bowater Mersey mill, is scheduled to shut down Sunday for about two weeks. It also shut down last month, the latest in a series of scheduled down times for the mill since December.

Late last year, unionized workers at the mill voted to cut 110 jobs in an effort to reduce labour costs and help save the operation, which used to employ about 300 people.

Dexter said a continued erosion of the pulp and paper market is not helping the forestry sector, which is being flooded by cheaper products from European mills.

A permanent closure would be a blow to the area, which relies heavily on jobs at the mill. It could also pose some difficult questions for the provincial government, which provided a $50-million lifeline to the company last year.

In December, Dexter announced a $25-million forgivable loan to the firm in $5-million yearly portions, provided Resolute keeps the two paper machines operating and makes efficiency improvements in the mill and upgrades to a power-producing plant.

Dexter said $10 million of that forgivable loan was advanced to the company for capital breakdowns, but has not been spent. The remaining $15 million has also not been spent.

The province also spent $23.75 million to buy about 10,120 hectares of woodland from the company.

Another $1.5 million was offered over three years to train workers. So far, $605,000 has been spent on training to improve safety, efficiency and production, said a spokeswoman with the Department of Economic Development.

Dexter defended the deal Thursday, saying he wasn't prepared to give up on the plant.

"What would you do? You're going to walk away from the jobs of thousands of people? I think that would just be wrong," he said.