02/10/2012 11:13 EST | Updated 04/11/2012 05:12 EDT

Struggling Nova Scotia paper mill to temporarily halt operations next month

BROOKLYN, N.S. - A struggling Nova Scotia paper mill will shut down for at least three weeks starting next month.

Resolute Forest Products (TSX:ABH) says it will temporarily cease operations at its Bowater Mersey mill in Brooklyn on March 11.

The company says world paper markets are saturated and there is a shortage of new orders. It's the second shutdown at the mill since before Christmas, when it was closed for three weeks for the same reasons.

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. The provincial government also recently announced a $50-million rescue package aimed at saving the mill.

The leaders of Nova Scotia's two opposition parties questioned the government's decision to help the mill.

"Where was the business case that says the paper industry is going to rebound on a global sense," said Liberal Leader Stephen McNeil. "None of that was put forward. We, like everyone, want to see the people of Queens County and the entire province go to work, but it needs to be in a sustainable plan."

McNeil said it might have been better for the government to have spread the $50 million it spent to save the mill on a wider number of small businesses across Queens and Lunenburg counties.

"The long-term sustainability of those jobs may be greater," he said.

Conservative Leader Jamie Baillie said the government should focus on the economy generally.

"The right way for Nova Scotia to proceed for the forestry industry, for all industry, is to focus on getting the basics right," he said. "Having power rates that are affordable, having a tax structure that's fair, and I think a better way forward is to try and move away from these band-aid bailouts in the future."

Natural Resources Minister Charlie Parker said the money spent by the government acts as an investment into businesses and the economy in the area.

"It's all interdependent. The saw mill, the woodlot owners and it trickles down to the community convenient stores and restaurants and garages," Parker said from his constituency office in Pictou on Friday.

"It really is helping the whole economy of the region."

(CKBW, The Canadian Press)