The government of Newfoundland and Labrador will expropriate AbititiBowater Inc.’s timber rights and hydroelectric assets when the paper maker closes its last newsprint mill in the province in 2009, Premier Danny Williams said.
Williams announced the action Dec. 16 in a message to the Legislature after Abitibi indicated it would permanently close its mill in Grand Falls-Windsor in March 2009. The Legislature passed legislation to expropriate the company’s assets the same day it was introduced, Dec. 16.
The mill closure is part of the company’s plan to cut costs and reduce output due to declining demand. AbitibiBowater, North America’s largest newsprint maker, also has said it will shut a mill in the United States and eliminate 1,100 jobs.
Williams said the province’s Nalcor Energy utility will manage the hydropower facilities, which supply electricity to Abitibi operations and to the province’s grid. Abitibi may be compensated for any power-related infrastructure assets taken over by the provincial government, according to a statement that accompanied the legislation.
AbitibiBowater owns and operates several hydroelectric facilities in Newfoundland and Labrador, and in Ontario and Quebec. (HNN 1/30/07) Its Internet site mentions hydro developments in Newfoundland and Labrador on the Exploits River. Projects include 30-MW Beeton, 45-MW Grand Falls-Windsor, and the 20-MW Bishop’s Falls project, all on the Exploits River. It also is an owner of 18-MW Star Lake.
While the Newfoundland government now will own and control the assets, Abitibi is to have full use of them until March 31, 2009, Williams said. That will enable the mill to remain in operation as planned by the company.
Abitibi was surprised by the province’s action, saying it already had told the government it was willing to talk about the future of the assets. The company indicated it would consider taking legal action.
A 1905 lease agreement between a predecessor company to Abitibi and the then-British colony gave the firm access to timber and water rights for the purpose of producing paper.
Williams said because Abitibi is going to discontinue the operation of the pulp and paper mill and is reneging on a commitment to the province, the company no longer will have access to the natural resources. AbitibiBowater and its predecessor companies had the privilege of using the province’s natural resources for the past century, and it now is time to return the resources to the people, he said.