Northern Pulp advancing transformation plan:

Today, Northern Pulp Nova Scotia (Northern Pulp) is sharing an update on its commitment to using the best available technology to transform the kraft pulp mill into one of the world’s cleanest, most environmentally-focused mills. An Environmental Assessment (EA) registration document will be submitted to Nova Scotia Environment and Climate Change by the end of November 2021 to start the stringent two-year Class II EA process for the transformation.

“Our focus for the next couple of years is on defining a path for a new mill that aligns with the community’s aspirations, and on moving forward with the EA process with a transparent and science-based approach,” said Graham Kissack, VP Environment, Health & Safety at Paper Excellence. “Throughout the EA process, we are committed to engaging with stakeholders, conducting thorough environmental research, and being transparent with our results. We are convinced that a fact-based approach will allow for a successful EA. Our hope is to obtain clear terms of reference, and make sure expectations are set in a transparent manner from the start and remain consistent throughout the process.”

The proposed transformation of Northern Pulp has been developed considering community input, while using today’s best available technology to transform the mill into a best-in-class operation.

“We have been meeting with local communities and businesses with the Environmental Liaison Committee and the need for a transformed mill in the region is evident. Once environmental approvals are received, we intend to invest and build the best mill possible. We want to contribute to a successful economy, with over 600 jobs during construction, more than 300 direct and 2,500 indirect jobs during operations, a $279 million annual spend in Nova Scotia, a contribution of over $38 million in tax annually, as well as various contributions to our communities’ life and projects,” said Jean-François Guillot, Vice President Operations, East, Paper Excellence.

The transformation will result in:

• No odour in local communities during normal operations
• 70% reduction in visible plumes above the mill
• Water use reduced by close to half
• The most advanced wastewater treatment, to ensure the water released is clean and transparent (tertiary effluent treatment facility)
• An optimal location of release into Pictou Harbour determined through objective environmental & marine studies
• Updated appearance, with new exterior siding and finishes

While Northern Pulp is focused on transforming its operations and on the EA process, it has also taken the necessary steps to preserve its legal rights related to the closure of the Mill close to 11-years prior to the end of the term of the Effluent Treatment Facility (ETF) lease, which resulted in significant financial losses.

Northern Pulp tried unsuccessfully to engage the two previous provincial governments in settlement discussions. Recently, the new government requested that the Company file its legal claims related to the closure of the Mill and permit the Province time to evaluate the claims and supporting evidence as a prerequisite to engaging in any settlement discussions. Northern Pulp has started the process by making claims under the Province’s indemnity for the more than $100 million in losses already incurred and providing the Province with the required two months’ advance notice of its intent to commence legal proceedings to preserve its legal rights. Total losses related to the early closure of the Mill are estimated to exceed $450 million.

The resolution of legal proceedings through a timely settlement is a critical component of Northern Pulp’s plan to transform and re-start the Mill.

“This action confirms our desire to reach a mutually agreed-upon settlement that is fair to taxpayers and compensates us for the losses suffered. Our intention is to use these funds to transform and re-start the Mill once we receive environmental approvals,” said Guillot.

The reinjection of the funds would benefit Nova Scotians across the province during the transformation phase and operations and provide an economically viable solution for implementing ecological forestry.

Northern Pulp is operating under protection of the Companies’ Creditors Arrangement Act (CCAA) and will appear before the British Columbia Supreme Court on October 29, 2021, to request, among other things, an extension of their protection until April 30, 2022.

For more information about Northern Pulp’s proposed transformation, visit www.TomorrowsMill.ca(External link).

Further information regarding the CCAA proceedings is available at the Monitor’s website www.ey.com/ca/northernpulp(External link).

Boat Harbour ETF Agreement

Background Summary

• The Province of Nova Scotia recruited Scott Paper to build a new pulp mill in Pictou County in 1967.
• The Province offered to build, own and operate an effluent treatment facility (ETF) and provide fresh water and a crown wood licence if Scott Paper built a new pulp mill.
• The Province built and owns the Boat Harbour ETF, and operated it until 1995 with little or no environmental regulation.
• The Province leased and transferred responsibility for operation of the Boat Harbour ETF to the owner of the mill in 1995. The Province provided a broad and comprehensive indemnity to the mill owner at that time to protect the mill owner from risks related to assuming operation of the Boat Harbour ETF and the past operation of the Boat Harbour ETF by the Province. In 2002, the term of the lease was extended until the end of 2030.
• Northern Pulp acquired the mill and rights under various agreements with the Province in 2008 from a successor to Scott Paper. Paper Excellence acquired the shares of Northern Pulp in 2011.
• In 2015, the Boat Harbour Act (BHA) was passed that called for the closure of the Boat Harbour ETF by January 2020, almost eleven years before the end of the term of the lease.
• Northern Pulp was unable to gain environmental approval for a proposed replacement ETF by the BHA deadline, and the Province ordered the existing Boat Harbour ETF closed by January 2020, effectively shutting down the mill and breaching obligations to Northern Pulp under the lease and other agreements.
• Northern Pulp and its affiliates have been forced to take steps to commence legal proceedings against the Province to preserve and protect their legal rights within legal timelines.
• In the meantime, Paper Excellence wants to transform the Northern Pulp mill into one of the cleanest in the world. They have proposed a total transformation of the mill responding to expressed community feedback regarding effluent treatment, odour, chemical use, carbon reduction, and forestry practices.
• Northern Pulp is ready to have its transformation proposal assessed on its technical and scientific merits by an objective, expert, and fair process.