Northern Pulp, five years after the closure of its mill in Nova Scotia, has initiated the process of selling off its company assets. This announcement was made on Monday night, marking a significant turn in the company's trajectory following its inability to secure funding for the establishment of a new pulp mill in the province.
The company's decision is based on the findings of a comprehensive feasibility study, which concluded that Northern Pulp could not meet the required 14% Internal Rate of Return (IRR) mandated in the settlement agreement necessary to develop a modern bioproducts hub in Liverpool, Nova Scotia. This outcome underscores the financial challenges that the company has faced since its operations ceased.
In the news release, Northern Pulp expressed gratitude for the support received from the provincial government and local stakeholders throughout the feasibility study process. However, the inability to move forward with the new mill has led to a reconsideration of its assets and future direction.
Tory Rushton, the Nova Scotia Minister of Natural Resources, commented on the situation, expressing disappointment over the failed attempts to establish a new, sustainable pulp mill in the province. Rushton stated that the government had made extensive efforts to assist Northern Pulp in transitioning towards a more environmentally friendly operation. He mentioned that while the current outcome was not as hoped, the provincial government remains committed to partnering with the industry and the federal government to attract new investment and partners who see potential in the region.
The financial implications of the asset sale are significant, with proceeds allocated first to creditors and pension plans. Additionally, funds will cover closure and maintenance costs, with any remaining amounts directed to the Nova Scotia government. This structured approach aims to mitigate financial liabilities as the company winds down its operations.
Northern Pulp's Pictou County mill was ordered to shut down in 2020 by the provincial government after the company failed to comply with the requirements for a new effluent treatment plant. This closure has had lasting effects on the local economy and has prompted discussions about the future of industrial operations in the region.
As Northern Pulp proceeds with its asset sales, the focus will be on navigating the complexities of insolvency while addressing obligations to its stakeholders. This situation highlights broader themes in the forestry and industrial sectors in Nova Scotia, including the need for sustainable practices and the challenges inherent in transitioning from traditional manufacturing to modern bioproducts that align with environmental standards.
