ESPANOLA—Algoma-Manitoulin-Kapuskasing MP Carol Hughes is perplexed how the final closure of the acquisition of the Domtar Espanola paper mill, just under two years ago to Paper Excellence, brought comments from Paper Excellence administration that they welcomed Domtar to the team and felt that the future was bright for Domtar. Last week Domtar announced it will indefinitely be idling the mill.
This was outlined by MP Hughes in an interview with The Expositor last week as well as in a letter she has forwarded to federal industry Minister Francois-Philippe Champagne.
“I asked Domtar representatives if they had asked the federal or provincial governments for funding to get them through this. They said no,” MP Hughes told the Expositor. “When jobs were disappearing in the auto sector, government funding support was provided. We have to at least try to save the 450 jobs that are being lost at Domtar.”
“As I was doing my research into all of this, I found that two years ago, in November 2021, the deal to purchase was concluded between Domtar and Paper Excellence,” explained MP Hughes. “What needs to be in place is that if you allow a foreign entity to hold a business there needs to be a guarantee in place to keep the jobs and the industry, in this case the pulp and paper industry, going. I was told that for three years the mill has been losing money. But when the new company purchased it they said they were happy with the product being produced and that the future was bright—things were working out,” said MP Hughes.
“Then we get the news last Wednesday that Domtar is closing down,” said MP Hughes. “I certainly don’t have all the answers on this yet, but was the intent to buy Domtar and then close it to reduce the competition and to keep similar entities remaining vital in the market for foreign companies?”
“As I said, I don’t know all the answers,” said MP Hughes. “But you have to question what is going on.”
“At the end of the day the company has not asked either the federal or provincial governments for assistance to mitigate the issues they are experiencing,” said MP Hughes. “And it doesn’t stop the governments from stepping forward and helping out. There are 450 jobs that are being affected.”
In her letter to Minister Champagne dated September 6, MP Hughes wrote, “no doubt you are aware of today’s announcement by Domtar of the indefinite closure of its pulp and paper mill in Espanola which will affect approximately 450 employees and others who rely on the industry.”
MP Hughes explained, “in 2019, the federal government provided Domtar with $28.8 million in funding to help the mill deliver technical innovation to produce products that could help reduce the use of single-use plastics.” It was also meant to assist in preserving jobs and “increase the company’s competitiveness, reduce production waste, and reduce greenhouse gas emissions.”
“According to the (Domtar) press release and my conversation with Ms. Bonny Skene, regional public affairs manager for Domtar, the operation or the Domtar Mill is no longer viable,” continued MP Hughes.
“Yet, it wasn’t quite two years ago that the details of the acquisition of the Domtar Espanola Mill took place and at the time, Joe Ragan, global chief financial officer of Paper Excellence had stated that they were ‘excited to welcome Domtar and its impressive team to the Paper Excellence Family,’ and the president and CEO of Domtar, John Williams had indicated that ‘the future is bright for Domtar’.”
MP Hughes wrote, “Given the short amount of time between the purchase by Paper Excellence and this indefinite closure announcement, many can’t help but wonder if the interest and intent by Paper Excellence from the beginning was to actually close the mill to reduce competitiveness in the market. It is evident that the federal government must do more to ensure that these types of sales include guarantees to maintain their operations and protect jobs.”
“As you know, where there is a will, there is a way! Therefore, at this time, I am requesting that you (Minister Champagne) meet with representatives of Domtar and Paper Excellence to do all that you can to prevent the upcoming closure (October 2023) of the Espanola Mill,” Ms. Hughes wrote.
“I would also appreciate an opportunity to meet with you and your officials to discuss this critical situation given the hardship and ripple effects this will have on so many individuals, businesses and communities,” added MP Hughes in her letter.
Ms. Skenes told The Expositor, “Back in 2018-2019, Domtar undertook an innovation project at the Espanola facility with government support. The project was delayed by a number of factors including significant maintenance investments required at the mill and the global pandemic. It became evident that the mill needed additional extensive infrastructure investment before such a project could proceed and the project was put on hold.”
“We started to implement the project before COVID hit, and then found there needed to be an extensive infrastructure investment before the project could go ahead. So, the project was put on hold,” reiterated Ms. Skene.
“The decision to indefinitely idle the Espanola facility is based on the mill having been challenged for a number of years,” said Ms. Skene. “We have worked diligently to find a viable path forward for the operation including offering it for sale. It is being idled due to ongoing operating losses and costs associated with maintaining the facility.”
Minister Champagne, in a follow-up letter to MP Hughes wrote, “I heard about the terrible news and we have already started a process to assess what are the outstanding obligations of the company towards the government of Canada and how we can help the workers.”
MP Hughes noted that the minister’s answer wasn’t really what she was asking about. “I was asking the federal government to work with the province and the company to keep the business going and the workers employed, similar to what has happened with the automobile industry.”
“Domtar hasn’t asked either government for money,” said MP Hughes. “I want to know if there is assistance to protect the jobs and the business. I will be following up with Minister Champagne due to the critical nature of this situation, given the impact it is going to have on workers and the communities.”
Domtar had been acquired by the Paper Excellence Group in 2021. Both companies had announced plans to acquire Resolute Forest Products in July 2022.
However, the Competition Bureau voiced concerns that this merger would reduce competition of northern bleached softwood kraft pulp in central and eastern Canada.
As a way to settle the issue, an agreement for Resolute, a Domtar subsidiary, was made to sell the Thunder Bay pulp and paper plant to Atlas Holdings recently. Domtar’s Dryden pulp mill is now owned by First Quality Enterprises and named Dryden Fibre Canada. Meanwhile, Domtar had already put the Espanola mill up for sale. This past May, Paper Excellence was asked before a parliamentary committee to answer questions about who owns the company and its complicated network of holding companies.
