The Town of Fort Frances is calling on Queen’s Park to pull Resolute Forest Products' licence to harvest wood on the Crossroute Forest.
In an Aug. 13 news conference, Mayor June Caul called out the “arrogance” of the Montreal-headquartered paper giant for its attempt to “monopolize” control of the nearby Crown forest, and wants the province to cancel the sustainable forest licence (SFL) granted to the company.
After town officials learned of Resolute’s imposition of a non-competition agreement on the new owner of the dormant pulp and paper mill, they want the province to step in and transfer Resolute’s share of wood in the Crossroute to new investors who will restart operations at the plant, closed since 2014.
“It appears Resolute thinks they own our forests,” Caul read in a prepared statement inside council chambers, flanked by her colleagues.
“They’re wrong. The forests of our district belong to the people of Ontario, to our communities, not a Quebec-based multi-national corporation.”
In July, the municipality learned the mill had been sold to a numbered company affiliated with Riversedge Developments, a Waterloo-based brownfield redeveloper.
The company is headed by Justus Veldman, who has been involved in repurposing industrial sites at former forestry mills in Sault Ste. Marie, Red Rock and Iroquois Falls, the latter property also being a former Resolute mill.
Local politicians were recently made aware of a restrictive covenant agreement on the new owner that will prohibit pulp and paper operations from ever resuming, ensures the papermaking equipment is scrapped, and that any negotiations with the province on accessing local Crown wood are on hold for a period of ten years.
The agreement puts a chokehold on any local hopes of luring a new manufacturer in town.
“The arrogance in the creation of these covenants shows how little respect Resolute has respect for our government and for the people of Ontario,” Caul said.
“This is corporate conduct that should be condemned and penalized by the highest levels of government.”
The town is banking on Kenora-Rainy River MPP and Northern Development, Mines and Energy Minister Greg Rickford to ensure the mill property and their economic interests are protected when he meets with Resolute officials in Toronto this week.
Over the years, municipal officials grew increasingly frustrated that Resolute continued pulling fibre from the Crossroute to feed its Thunder Bay operation, 350 kilometres to the east.
Town officials argue what Resolute is doing is contrary to the SFL agreement, which ties the fibre to the Fort Frances mill. They accuse the previous Wynne government of allowing Resolute to divert wood to Thunder Bay.
The municipality maintains that the mill can be brought back to life as a number of interested parties have come forward over the years, including potential startup Rainy River Packaging (formerly known as Repap) just before last Christmas.
But they argue, Resolute always viewed these parties as potential competitors for the local wood supply and subsequently chased them off.
Community leaders are especially concerned that a $3.5-million mortgage was registered on the land’s title from a Toronto scrap metal company, Combined Metal Industries.
“It would appear to us that Resolute intends to destroy the mill, sink the public investment and remove the economic engine of our district,” said Caul.
“These are not the actions of a good corporate citizen but attempts to consolidate control over a publicly-owned forest and extract the benefit of our natural resources while destroying our community’s key economic driver.”
Resolute spokesman Seth Kursman said the company is abiding by the “letter and the spirit” of the regulations within the SFL agreement.
He accused municipal leaders of grandstanding, vehemently countering that the company has a right to protect its business interests in the northwest with respect to the restrictive covenant agreement.
Placing conditions on these kinds of transactional agreements involving industrial facilities are fairly “routine,” Kursman said, especially when selling assets to a potential competitor.
“People are playing it up as something here that’s somehow inappropriate.”
Kursman further disputes the town’s assertion the mill property was sold for a nominal fee of $1, saying it was a $1-million transaction with Riversedge.
“This is not in anyone’s long-term interest to go down the path of sensationalizing.”
Kursman declined comment if Resolute viewed parties, such as Rainy River Packaging, as competition for wood supply or in the marketplace.
He added only that Resolute needs access to “cost competitive fibre” and any diversions would have a “domino effect” that would undermine their operations and those of the regional forestry players that they sell wood to.
Caul further contends that the previous Wynne government was squarely in Resolute’s corner in waiving of a $23-million provincial grant to the company after the mill’s closure.
She said it worked at odds with their long-standing efforts to work with the province to establish an Enhanced Sustainable Forest Licence, a new locally-run forest management model.
Minister Rickford was not available for comment and in a statement gave little clarity on what the province is prepared to do.
“As the former owner of the pulp mill, decisions regarding the sale of the facility are Resolute’s to make. I will continue to work alongside the Fort Frances community and fight to ensure that the site benefits the hardworking people of Fort Frances, and that it will continue to be an important economic driver for the area.”
He added the Ford government is still in the process of developing a new pro-business provincial forestry strategy.
Kursman said Riversedge Developments are proposing some “exciting development opportunities” that will create many well-paying jobs.
The developers, he said, are putting up $2 million toward site cleanup and $3.3 million in other financial assurances in order to satisfy the Ministry of Environment, Conservation and Parks.
In an Aug. 12 news release, Riversedge is floating the proposition of a cannabis production facility at the mill site by working with a “world-renowned cannabis production partners that can put the site’s infrastructure, assets and human resources back to work.”
The possibility of a cannabis plant didn’t excite Caul, who was cool to an invitation by Veldman of a public tour of the mill property, saying she would participate in a site visit with a civil engineer with the intent of restoring the plant to its original function.
In considering its legal options, the town contemplating whether to file an application against Resolute with the Competition Bureau on possible violations of restrictive covenant agreements.