NLIS 7
March 16, 2005
(Natural Resources)
 

The following was issued today by Ed Byrne, Minister of Natural Resources. It was also read in the House of Assembly:

I rise in this House today to provide an update to the people of Newfoundland and Labrador on the status of discussions between this government and Abitibi Consolidated Inc. on the future of its operations in Stephenville and Grand Falls-Windsor.

Government is very concerned about the future of both of these paper mills and the impact that any change in their operations would have on its employees, the communities in which they live, and indeed, the entire regions which view these mills as the drivers of their regional economies. And generally, we are concerned about the future of the pulp and paper industry in this province.

It was very early in our mandate that we understood very clearly that we had to engage Abitibi to try to resolve some of the issues facing the company. At that time, our understanding from the company that their focus of concern was on the Stephenville mill due to its high energy costs and its lack of a dedicated on-island wood supply.

Initially, this government established a ministerial working group which included myself, as the Minister of Natural Resources, and the Minister of Innovation, Trade and Rural Development. This working group was supported by senior government officials including the deputy minister of Natural Resources, the chief executive officer of the Forestry Services Branch of my department, and the deputy minister of Innovation, Trade and Rural Development.

Our task was to seek solutions to the issues facing Abitibi�s mill in Stephenville.

While these discussions were ongoing - as a sign of good faith - government directed Newfoundland and Labrador Hydro to renew its contract - known as the Interruptible B contract - with Abitibi. This contract paid $1.3 million to Abitibi in 2004 should Hydro require Abitibi to slowdown its Stephenville operations to lessen the demand on the provincial electricity grid during peak months during winter. As it happened, Hydro did not have to interrupt the power to Stephenville mill; yet, Abitibi retained the $1.3 million.

On December 15, 2004, Abitibi informed government that unless we could provide some assistance with cost, immediately on the energy side, and long-term on both the energy and wood supply, the company would announce in January 2005 the permanent closure of its Stephenville mill.

Based on that information, I arranged to meet with John Weaver, chief executive officer of Abitibi, on December 21, 2004. During that meeting, I clearly outlined for Mr. Weaver and his senior vice-presidents that we want Abitibi to maintain all of its current operations in this province.

I also made it clear to Mr. Weaver that priority or absolute access for Abitibi to the wood supply in Labrador was not something this government was prepared to consider. Should Abitibi want access to this wood, then I informed the company they need to build partnerships and relationships with the key stakeholders in Labrador to achieve that objective.

However, I believed at that time, there remained an opportunity for us to continue discussions with the company. Again, as a sign of good faith, this government agreed to a request from the company to provide a contribution of $1 million, which offset the power rate increase for a period of 60 days, provided government with access to the company�s data, designs, estimates and other information related to potential hydro developments on the Exploits River, and allowed time to explore all options.

Just over a month following that meeting, we were advised that Abitibi was undertaking internal operational reviews of four of its mills - including Stephenville and Grand Falls-Windsor.

That was the first indication this government had that Abitibi was also putting its operations in Grand Falls-Windsor through a formal review.

Since that announcement by Abitibi, there has been much speculation about what this company plans for its Newfoundland and Labrador operations - much of which has been provided by the company itself. It is from the company that the employees of the Stephenville and Grand Falls-Windsor mills and the people of this province have learned of several options under consideration by the company. According to the union these options include: 1) Continue to run the mills in Stephenville and Grand Falls-Windsor but find ways to cut costs; 2) Close the Stephenville mill; or 3) Close Number 7 machine in Grand Falls-Windsor and maintain Number 3 machine.

Obviously, those options have caused much anxiety among the people whose livelihood is dependent on Abitibi maintaining all of its operations here - from the people working in the mill, to those harvesting the wood, to the business that supplies goods and services, to the corner stores, the restaurants, hotels - and the list goes on.

Within the past week, I have had the opportunity to meet with the unions which represent the mill workers and loggers for both the Stephenville and Grand Falls-Windsor mills.

As well, in the coming days, I plan to meet with representatives of the municipalities in these two regions of the province.

While there has been much speculation of what Abitibi intends to do, I want to take this opportunity to quite clearly indicate to the employees, their unions, and to the people of Grand Falls-Windsor and Stephenville, this government�s position on a couple of key issues.

This government does not have any intention of amending Bill 27 which is the piece of legislation that provides Abitibi with its timber licences until 2010 with the condition that it retain the operation of two papermaking machines in Grand Falls-Windsor and maintain annual production levels at substantially the same levels as those in the proceeding three years of the 2002 agreement.

Our discussions with Abitibi are ongoing with regard to addressing the challenge of energy costs at the Stephenville mill. We will continue to explore all possible solutions to these challenges. Our objective is to reach an agreement that will assist Abitibi yet not put any extra burden on all the ratepayers, including residential and industrial customers.

As you can appreciate, this government does not want to see any downgrading of the Abitibi operations in Newfoundland and Labrador.

I want to assure Abitibi�s employees in this province, the unions that represent them, the people of Grand Falls-Windsor, the people of Stephenville, the residents of the surrounding communities, and all of Newfoundland and Labrador, that this government is committed to looking at any and all options, and is prepared to do what is reasonable to see these mills operate into the future.

2005 03 16               2:25 p.m.


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