The Nova Scotia government is revising a funding package for the NewPage Port Hawkesbury paper mill after a tax agreement considered vital to restart the operation was rejected.
Energy Minister Charlie Parker said the government has changed a $124.5-million deal it announced last month after the Canada Revenue Agency dismissed a power-rate arrangement for the shuttered Cape Breton mill.
Mr. Parker said the government crafted a "Plan B" in case the arrangement was rejected and talks began with the mill's prospective buyer, Pacific West Commercial Corp., soon after the Canada Revenue Agency made its decision Thursday.
"There was really no other option," Mr. Parker said in an interview Friday. "It is just vitally important that mill be up and running to protect the workers and their families."
He said the agency's ruling allowed the province to grant Pacific West Commercial forgiveness on some of the loans the Vancouver-based company would receive under the funding. He said details would be released next week.
Under funding announced in August, the government offered Pacific West Commercial financial incentives including $66.5-million in loans, $26.5-million of which could be forgiven if it meets certain criteria, including wage targets.
The government also agreed to buy about 20,840 hectares of land from NewPage Port Hawkesbury for $20-million. That money would go to the mill's creditors, who have agreed to accept less than what they're owed from the operation.
Pacific West Commercial said it needed the Canada Revenue Agency to approve a power rate deal it negotiated with Nova Scotia Power before it could reopen the mill.
Last month, Nova Scotia's Utility and Review Board approved the arrangement, which included a discount electricity rate and would've made Nova Scotia Power a partner in the mill.
Mr. Parker said the government supported Pacific West Commercial's arrangement with Nova Scotia Power – even though it would have meant forgoing tax revenues – because it wanted to support the company's efforts to reopen the mill.
"Now they will be paying provincial tax and that's tens of millions of dollars that will be coming to the province that otherwise wouldn't have," he said. "That allows us some flexibility within the package that was restructured."
Pacific West Commercial did not return messages seeking comment. But it issued a statement saying it had reached an agreement in principle with the government.
"Pacific West Commercial Corp. recognizes the importance of the mill restart to employees, customers and all other stakeholders and expects that all required approvals will be in replace for a successful restart of production before the end of September," it said.
The company said 150 workers were at the site carrying out the work needed to resume production. Pacific West Commercial has offered $33-million for the plant.
Also Friday, councillors in Richmond County voted to cut the mill's property taxes in half, a measure that could see Pacific West Commercial pay $1.3-million annually in municipal taxes. The company has argued before the province's Supreme Court that it should pay less than that – about one-sixth of its $2.5-million municipal tax bill. The matter returns to court Monday.
The mill in Point Tupper, N.S., shut down last September, laying off some 600 employees and affecting another 400 forestry contractors. It opened in 1962.