MILL CLOSURES: WHAT CAN BE LEARNED FROM OTHERS?

Preserving Options and Opportunities – Avoiding Unintended Consequences

As two Nova Scotia communities face major job losses with the potential permanent closure of pulp and paper mills, there are lessons to be learned from the experiences of others who have faced this situation previously.

Over the past several years, Halifax Global has worked directly with three communities in Eastern and Northern Ontario, as well as with a provincial government, to help them define pathways to a sustainable future forest industry in the wake of a major pulp – paper mill closure. We have learned much from each situation about enhancing opportunities, options and potential for success, as well as about unintended consequences that result from statutes, policies and regulations developed in a different era for different sets of circumstances.

Three particular lessons are important for Port Hawkesbury and Liverpool, and for the Province.

Retain and Preserve Infrastructure and Equipment

When a mill or a paper machine is shut down permanently, it is reasonable to expect the owner wants to ensure that production capacity is permanently removed from the marketplace. This is especially the situation in the newsprint industry, where the overriding, fundamental challenge is declining demand and excess production capacity.

In a shutdown, the paper machine is likely to be scrapped or have major components removed to ensure no future paper production. However, mill infrastructure such as pulp lines, electrical and control systems, waste treatment, shipping and warehousing, and office facilities all have potential for future use by new ventures that will not be competitive with the prior owner’s business. Such infrastructure can be leveraged by economic development agencies to support establishment of new ventures.

Ensuring that availability, however, requires collaboration among all stakeholders, including the community, the Province and the mill owner to ensure that assets are preserved, kept heated where essential and maintained at basic levels to ensure future usability.

Look to the Future – Try New Things

As a communications medium, newsprint is not quite a ‘buggy whip’ industry, but it’s getting closer. However, as I have noted previously, new industries need to be considered as part of Nova Scotia’s future forest sector. Examples can include biochemical extraction and processing of hemicelluloses (sugars) in woody biomass to facilitate production of five and six carbon sugars which can be processed into advanced biofuels, biopolymers and other products. The cellulose fibre and lignin can also be processed into advanced composites; and residual materials can be cost effective feedstock for bioenergy generation.

Interesting new research being undertaken in Canada shows promising potential for conversion of thermo-mechanical pulp (TMP) lines to bio-refining applications. TMP is the pulping technology used at both Port Hawkesbury and Liverpool and idled TMP capacity at either or both facilities may be suitable for pilot or early stage commercial scale demonstrations to prove technology viability.

Such ventures will not instantaneously replace the employment lost through mill closures. But, they can lead to development of locally-based, knowledge and technology intensive industries that can sustainably process our forest resources over the longer term.

Avoiding Unintended Consequences

Rightly so, shut down of a heavy industrial facility such as a paper mill can trigger regulatory requirements for mitigation and remediation of environmental impacts. However, these statutes and regulations were developed in an era when mill closures resulting from major decline of an entire industrial sector were not anticipated. Hence, efforts to develop new ventures on such a site can be seriously constrained if there is insufficient flexibility permitting alternative uses incorporated into environmental policies and regulations. The result can be a mill site rendered unavailable for potential new ventures for such a period that infrastructure deteriorates beyond any useful level. The outcome – definitely unintended – can be a community facing a potentially even larger remediation challenge at a site which by then will have limited or no economic development potential.

Application of these lessons to the benefit of Nova Scotia communities will be challenging, especially in the context of bankruptcy-related processes underway in connection with the Port Hawkesbury mill. However, with creativity and willingness to pursue new directions by all stakeholders, a sustainable forest sector of the future can be found in approaches and product streams that capture value from the widest possible range of properties of our resources.