Marshall defends $90-million loan for Corner Brook paper mill

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James McLeod
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Finance minister says questions about money 'jeopardize' Corner Brook mill's future

The Corner Brook Pulp and Paper mill. — File photo

Natural Resources Minister Tom Marshall elaborated in the House of Assembly this afternoon on a $90-million loan to assist Corner Brook Pulp and Paper Ltd.

 "Corner Brook Pulp and Paper is a key employer and a strong contributor to our economy. The mill is important not only to the west coast, but the entire province. Government has clearly stated that we will provide support only when negotiations for a new contract are concluded for all eight unions at the mill," Marshall said.

 Budget 2013 sets aside $90 million in the form of a loan to provide support to Corner Brook Pulp and Paper to help the company address challenges in the industry.

Marshall said this financial assistance to the paper mill in Corner Brook, a major employer of the region, is in the best interests of the people of Corner Brook and indeed the entire area.

 "This loan will enable Corner Brook Pulp and Paper to become a low cost producer. Our investment will strengthen the company, which has been a long-standing, good corporate citizen in Newfoundland and Labrador," Marshall said. "It will also help ensure the long-term security of our integrated sawmill operations which are the backbone of the sawmilling sector."

The provincial government has invested $58 million in Corner Brook Pulp and Paper from 2004 to 2012 in various projects. This amount does not include Power Purchasing Agreement sales of $65 million which provides a source of revenue for the paper mill.

Corner Brook Pulp and Paper employs an estimated 610 full-time and casual workers in the mill, forestry operations, and Deer Lake Power. It is the sole paper producer in Newfoundland and Labrador and one of the largest private employers in western Newfoundland.

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Earlier story

Finance Minister Jerome Kennedy revealed Wednesday morning that a $90-million mystery fund in the provincial government's budget is for possible financial support at the Corner Brook Pulp and Paper mill.

In a testy back and forth with NDP Leader Lorraine Michael in estimates committee meetings in the House of Assembly, Kennedy said that even by asking questions about the money, Michael is threatening the future of the Corner Brook mill.

“These questions that you're asking certainly put into jeopardy everything that's going on,” Kennedy said.

In the 2013 budget, the government has set aside $90 million for “financial assistance” but the budget doesn't give any specifics on what the money might be used for.

In recent weeks, opposition parties have pressed for details, but the government has only said that it may be used to help out one or more companies in the province, but that negotiations are still ongoing, and the whole situation is too sensitive to provide any details.

Premier Kathy Dunderdale has said that the money won't be spent without telling the public what they're spending it on, though.

For the sake of perspective, $90 million represents roughly the same amount of money as the government spends on the entire departments of Service NL, Environment and Conservation, and Fisheries and Aquaculture combined.

Estimates committee is an annual process where opposition politicians get to question government ministers and their top bureaucrats about the budget allocations. It tends to be a less politically charged environment than other House of Assembly proceedings, and ministers are frequently more forthcoming and unscripted than at other times.

At first, when Michael asked about the money, Kennedy only assured here that it was needed for “ongoing discussions” and he said it's not for Nalcor.

Kennedy said the money is essentially sitting there on the books, in case an agreement is reached, so the government can quickly spend the money if need be.

“We have to have money in terms of negotiations ongoing,” he said. “The money is there to allow for an expeditious resolution if an agreement is reached.”

At first, Kennedy wouldn't reveal what the money was earmarked for; instead, he cryptically said, “I think everyone in the room had an idea of what this is about.”

In recent weeks, Michael has been vocal about the fact that MHAs are being asked to debate the provincial budget without knowing what the money is for.

“There are more open ways,” she said. “I do find it very, very difficult to have this kind of money there and have people accept it and vote on it without an open discussion.”

Michael pressed the matter, asking point blank whether this money is for Kruger Inc. which owns the Corner Brook mill.

Kennedy offered up that yes, that was in fact the case. But he also made it clear that the government is not looking at just giving the money to Kruger; it would only be some sort of loan or financial arrangement.

“Certainly, Corner Brook Pulp and Paper is one of the issues here,” he said. “The discussions with Kruger were not around providing subsidies or grants.”

Kennedy said he's revealing this because the government has been accused of being secret, but by doing so, it threatens the future of the mill.

“You've accused us of being secretive and not being open. We've indicated on numerous occasions that this is commercially sensitive,” he said to Michael. “Now, as opposed to simply having this out there and aspersions being cast, you've been digging and you've got your answer.”

Organizations: Kruger Inc., Service NL, Aquaculture combined.Estimates committee

Geographic location: Corner Brook

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Recent comments

  • Leslie
    April 17, 2013 - 22:58

    So many people formulatng so many narrow mined ideas with so little information. Why does everybody want to see the mill in Corner Brook shut down so badly? So Kruger is a billionaire. If Corner Brook shuts that won't change; he still will be one. If that shuts it is the people of this provinc ho wiser. Kruger has said he is spending no more on it. Is anyone aware of the cuts and rolbcks employees have taken already to try & keep thie place running? How many people out there would work 365 days a year and give up all their stat holidays? How many would take 15% cuts to keep their jobs running. Remember ....... the people of that mill & spin offs paid their taxes as well & deserve tohave efforts to have their futures secured just as everyone else does.

    • david
      April 18, 2013 - 12:15

      Your premise is complete, irrational garbage. But don't take it personally....you learn that from living here and listening to utter nonsense constantly. I don't want to see the mill shut down. I want to see it flourish and prosper. But I don't have any control over the powerful myriad market and operational issues that determine that. All I have is one, very powerless vote every 4 years over my my tax money, which I know can be spent in places that taxpayers badly need services. If Joe Kruger and his professional, highly experienced management team cannot figure out a way to make this operation proifitable, or convince knowledgeable private investors that freely investing their own capital in this is a sound idea, why should the Newfoundland taxpayer be always turned to as "rube-of-the-minute"? Is my money so worthless that it can be flushed down the toilet so glibly, by thieves who tell me they love me? If so, please just leave it my pocket and I'll flush it myself. Cutting out the 'middle man' would help balance the budget, no?

  • meme
    April 17, 2013 - 21:57

    $90 million?? wow its not worth saving!! I myself could take this money and put it places its needed that I see everyday!!! spread the wealth!!!

  • bob jones
    April 17, 2013 - 19:50

    Tom Marshall got some nerve. Buying votes is an understatement here. I can see why there is so much doubt and hostility towards this Flunderdale government. Next election is not too far away my pc's. Tom Osbourne can hold his head up high knowing he is not part of this latest brain storm. I am sick to my stomach watching this crap unfold, all the while us tax payers for now have to take it!

  • Are we all Stupid Newfies?
    April 17, 2013 - 19:27

    This joke of a government is doing it again. They really believe that we are stupid. And I take exception to the way Dunderdale speaks to us as though we are imcapable of understanding her. Does she think that we need her to explain all the stupid decisions that she is making? If she is so right about rounning the best government , let her call an election. Oops forgot. The did close freedom of information to the people of Newfoundland and labrador. She claims that we have the second best high school graduation RATE in the country. She really must believe in the Easter Bunny. Just wondering where those figures come from... Must be from the no fail policy of school boards and pass even if you do not work. From what I see, I can't see how she can claim that when we have students that cannot read, write or do simple Math. As for the math.. 9,000, 000 for 110 jobs in ABE. (82, 000 per job) verses 90,000, 000 for 600 jobs in Corner Brook for friends Kruger. (150,000 per job ) for Billionaires. Way to go Cathy.

  • sc
    April 17, 2013 - 19:01

    How can a government that has such a huge deficit afford to give such a massive loan to a private company with, I suspect, no guarantees that the company won't simply come running back again in a couple of years demanding more or it will close down. According to what I've read here, this mill is outdated, inefficient and prducing a product for a market that is already saturated. The government's "plan" is to throw money at this mill, supposedly to make it more efficien, until the international marketplace improves. Having seen the way this govenment has handled the province's finances, does anyone really think it can correctly predict what will happen to the international demand for paper?

  • Fred Penner
    April 17, 2013 - 18:29

    Our politicians are a mediocre lot....Micheals should have starred in Amadeus as Salieri (being closest to God) and wander about the House of Assembly...."I absolve you...I absolve you".

  • Duffy
    April 17, 2013 - 18:13

    Notice how they use the word "loan" when they give our money away to private business. But it is not their money so what the heck. One would assume that Mr. Kruger is jumping up and down with joy - I would for a 90 million lottery win. It would save a lot of time and money if they would give every retiree a few hundred thousand dollars and close the old non-productive plant that will never be competitive anymore. The workers-union always say they can make more in Alberta - the plane leaves daily from Deer Lake. Go Mr. Kruger - maybe next year another few million to your coffers! Just take care of the retirees!

  • Pissed off taxpayer
    April 17, 2013 - 17:24

    Where do the gov get off using OUR tax dollars to keep a private company going????!!! We NEED a new hospital in Corner Brook. 90 million could be used a little more wisely!! As for Muskrat Falls, alot of Newfoundlander & labradorians DON'T want it!!! Wouldn't hurt for the gov to LISTEN to the PEOPLE!!!

    • david
      April 17, 2013 - 19:04

      And again with the "new hospital" red herring...for the last time, there never was a new hospital, there will never be a new hospital, and pretty soon there won't be ANY hospital. The economy of Corner Brook amounts to whatever government wastefully, unnecessarily, and too expensively provides...and this government, in its ever-impressive competence and skill, has turned an oil windfall during the most lucrative 15-year period in the history of petroleum, is now BROKE.

  • tom
    April 17, 2013 - 16:48

    But we were against an incentive to ensure the IceCaps came to fruition and we could reap the tax on their salaries. I agree - something smells. But then again - with this bunch in govt - what else is new??

  • Will Cole
    April 17, 2013 - 16:47

    More corporate welfare being wasted on another dying industry. Why not pump another $20 million into that bloody seal hunt while you're at it? Bloody fools.

  • A Cut of Muskrat
    April 17, 2013 - 14:31

    Hey darin king let OCI have the fish for a few jobs. This is his district and whats 90 million of taxpayer money anyway.

  • Paul Locke
    April 17, 2013 - 14:29

    Kruger is a multi-billion dollar company! Why would we need to give them a 90 million dollar loan? Something's not right here and smells very fishy. Change the mill into paper towels or toilet paper, cardboard or paper bags but newsprint is a past product

  • mike
    April 17, 2013 - 14:13

    Newfoundland... where asking questions of public officials can threaten the future of an industry and jeopardize an entire region. Stop asking questions people! For your own good, let the kabal and kangaroo court do it's work! All Hail Dear Leader.

  • dan
    April 17, 2013 - 14:08

    Vote buying in CB! I don't want to see an industry fail but I also don't agree with propping up a multi national with money "we don't' have". Cuts to Education, Justice, health care etc ect and yet this? Its a loan, ok what is the interest, repayment terms? ABC in NL next election

    • david
      April 17, 2013 - 18:46

      If only it were good ol' vote buying...if only! This is just to keep the rotten old stern of the dory above water, while the "first class" passengers in the spiffy, newly painted bow keep looking ahead for landfall somewhere. SOS time.

  • Al
    April 17, 2013 - 13:36

    This government is all about misleading the people of this province... “At any time, as a government, we’re involved with negotiations with different groups around potential developments, investments, here in the province,” Dunderdale told reporters Thursday. “We don’t know at this point in time if those negotiations are going to be successful. But we have to put a block of funding in our budget that would speak to the success of those negotiations.”

  • Casey
    April 17, 2013 - 13:22

    Your dammed if you do and your dammed if you don't. Some of you know-it-alls should run for public office.

  • KR
    April 17, 2013 - 13:20

    Without strict controls and union involvement (EYES & EARS) "at the decision making process" on how this money is spent within the mill, ie. equipment upgrades, this money will never see the CB operation improvements. It will go to the big company's pockets. EYES OPEN ALL!!!!!!

  • Roy
    April 17, 2013 - 13:14

    Did you ever wonder why the province is already broke...because people in charge of the money are not capable of manageing it. ...I've been a supporter of the gov up until today. This is pathetic. We need to raise the bar on who can be elected...Roy Whalen

  • Newsreader
    April 17, 2013 - 13:13

    90 million dollars for a pulp and paper mill that is on its last legs, yet our government takes 1.2 million (a relatively measly sum) from our already underfunded public library system. As our government sees it, it's all about having a job and a bed.

  • david
    April 17, 2013 - 13:06

    If anyone didn't quite realize the desperate straights that the non-Avalon part of the province is in, this pathetic announcement sums it up. And it explain why Muskrat Falls is the over-inflated football that it is : so that Labrador won't be included in the calculation of "portions of the province without any hope of a future, no matter how improbable". Bravo, you thieves. Bravo. Oh, and get ready, Avalon....your time will come too.

  • david
    April 17, 2013 - 12:59

    The Land of Permanently Idiotic and Forever Indentured Fools. "LoPFIFs" for short.

  • Why a Mystery in the first place
    April 17, 2013 - 12:24

    If government believes in the necessity to keep the Kruger mill open with taxpayer dollars, why the necessity to keep it a mystery? Make a policy decision and stand by it. If the muck sticks, too bad.

  • Interesting
    April 17, 2013 - 12:06

    A financial arrangement, could that be to purchase Kruger assets such as the power plant in Deer lake.

    • great idea
      April 17, 2013 - 13:14

      interesting; i agree 100 percent with this idea; we should own every hydro generating station in nfld and lab; and be selling power to every industrial customer in this province; i hope this is what 90 million is for; super idea buy DL power from joe kruger

  • Maurice E. Adams
    April 17, 2013 - 12:02

    Government's own consultant (MHI) made it clear (and concluded) that Muskrat Falls was not a viable project if Corner Brook Pulp and Paper was not viable. So government is prepared to do whatever it takes so that it can keep Muskrat Falls going.... Nalcor's Muskrat Falls project depends on (MUST HAVE) an operating Corner Brook paper mill customer (even if the unbelievable sum of $90 million in taxpayer dollars only keeps the mill going long enough to get Muskrat Falls to the point of no return)......

  • Betty
    April 17, 2013 - 11:58

    Your joking right, 90 million for a failing mill, meanwhile there was nothing in the budget for the salaries for Home Support Workers. We have a aging population, the demands on home care worers have increased and yet they are getting just a bit over the minimun wage, The priorities of this government is beyond my understanding.

  • bill
    April 17, 2013 - 11:54

    Smokescreen! Tis money was set aside as some sort of slush fund. Now they have made up an excuse using Corner Brook P and P. Putting 90 million dollars to one sid just in case they decide to maybe give it to CB P and P for some undetermined reason in some undetermined manner someday down the road. Deception, pure and simple. This is beyond he pale!