It is confusing as to why governments appear to be lending much needed support to the forest industry on the one hand, yet taking it away with the other.
Anyone living in the North knows the forestry sector is in ruin. It has taken years to get to this point, and probably will take just as long for the industry to right itself. And to be sure, the onus should not be attributed solely to the current government who has done more for the sector than other governments in the past 10 years.
But time is of the essence. More mills are closing and with it the hydro generating stations that once were the heart of the operating mills. It is concerning enough to have these mills close in the first place, but to hear that these hydro stations will be separated to build a subsidiary to exercise company options for the purchase of a Georgia-based newsprint company, is a pill too large to swallow.
Multinational Abitibi Consolidated intends to do such a transaction through an initial public offering of an income fund.
The fund would hold a minority interest in Kenora, Iroquois Falls and Fort Frances hydro-electric assets. A CIBC World Market report states that Ontario assets are valued at roughly $325 million. While the main intent is for the company to get back to profitability, northerners are wondering at what cost? Selling off one natural resource, may not the answer to saving the other.
Yes, Abitibi says current arrangements to power the paper mills will still be honoured, but what happens if the company closes the plant? Can the fund holders look for energy users outside the region or perhaps the country? Do we, as stewards of the land, have control over who will be the minority shareholders or who will use our water resources? After all, they do belong to the people; not to the companies.
Make no mistake, water will become a hot commodity as the years roll on. Areas with little potential for hydro-generation as a result of limited water sources will be looking to regions outside their jurisdiction to acquire energy.
And while all this is happening, Ontario will be just starting to wrap its head around value-added ideology. Ontario was once part of the Forintek membership about 12 years ago, but the government of the day decided it wasn’t money well spent. Today’s Ontario government has been helping the sector play catch up ever since. When the province can become competitive once more they will require the energy means to produce product. If that energy has been promised elsewhere, then it will stall the forest industry once more.
Many say the country and province is giving our natural resources away. Ontario Forest Industries Association President Jamie Lim has said on numerous occasions during the softwood disputes that Canada has traditionally folded like a “cheap fan,” when it comes to standing up for lumber rights. Are we prepared to do the same with our water and energy sources?
To think the North will once again have to aqueous on power generating because companies such as Abitibi are looking to solve their bottom line woes is too much to ask of northerners. Even if the companies obtain revenue from the power plants, an Abitibi spokesperson says there is no guarantee those funds will see their way back into Northern projects. However, the money generated may be enough to restart or at least maintain mill operations in the North.
Where is the legislation that protects resource rights when companies decide to fold? Where is the framework that prohibits the selling off of natural based subsidiaries? Where are the people that take issue with such plans to sell off resources that are not even theirs to sell (water)? Why can the communities, where these companies once stood, not take over the hydro assets, instead of being acquired by possible foreign ownership? We cannot afford to be so passive-aggressive as to let what defines the North be taken away, without batting an eye.
There will come a day when we will look back and perhaps kick ourselves for being so agreeable as to let resources, like power generation, slip away.
We have nuggets of precious resources in the North that are not just mined from rock. Protecting the socio-economic fibre is what will ensure these resources stay around for years to come, and who better to steward them than the communities and the region who depend on their tax base.
Kelly Louiseize is Managing Editor of Northern Ontario Business and can be reached at kellyl@nob.on.ca
