05/16/2012 06:45 EDT | Updated 07/16/2012 05:12 EDT

Minister says serious talks underway for purchase of closed Newfoundland mill

ST. JOHN'S, N.L. - Newfoundland and Labrador's minister of natural resources says serious talks are underway with a company interested in taking over the shuttered mill in Grand Falls-Windsor.

Jerome Kennedy isn't naming the company, but says the proposal includes using part of the site to make wood pellets to export to Europe.

Kennedy says discussions have been ongoing for about a year.

Since the mill closed three years ago a couple of companies have come forward with expressions of interest, however deals were never made.

The province is still in a court battle with the former owner Abitibi over who's responsible for the estimated $100-million site clean up.

Kennedy says that could be a stumbling block in any negotiation because interested companies would want a guarantee that they wouldn't be responsible for any previous environmental liabilities.