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

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

James McLeod jmcleod@thetelegram.com
Published on April 17, 2013
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.”