Espanola looking to move away from forestry a year after Domtar idled the mill

It's been a year since Domtar indefinitely idled Espanola's pulp and paper mill and laid off most of the 450 employees that worked there. 

Potential buyers have since toured the place, but an offer has yet to materialize.

As the northern Ontario town heads into municipal budget deliberations, staff aren't anticipating the paper machines to be turned back on any time soon. 

Domtar is in conversation with the province to reassess the value of the decades-old plant on the Spanish River in a bid to reduce its municipal tax bill. 

Espanola's chief administrative officer Joseph Burke says the town will operate on the assumption that it will be receiving at least 15 per cent less money from Domtar in 2025, which could result in a loss of $200,000 for the municipality.

The real impact of the reassessment will be felt further down the line, according to Burke.

"Fifteen per cent is really just a preliminary number," he said, adding he hopes Domtar will try to soften the blow.

"It will be a very, very challenging budget process because we will be not only facing potential assessment loss from Domtar, but we are also facing significant increases in other areas of service that are beyond the town's control." 

Eyes turned to the future 

Domtar's sudden closure raised fears that workers would leave town and the value of homes would fall. 

But as CBC reported recently, the real estate market there is doing well, and this year's school enrolment numbers suggest most families have not moved out. 

Burke says 2024 was actually a record year for new housing developments in Espanola, with the creation of 28 new units since January. 

The town has applied for funding from the Federal Economic Development Agency for Northern Ontario (FedNor) to develop an economic diversification strategy that would involve moving away from depending on the pulp and paper industry.

"We don't feel comfortable relying on the rebound of the forestry sector," said Burke. 

He says Espanola could bank on becoming a commuter town, and being a service hub for other municipalities in the area. 

"We could be looking at new industries with connectivity coming to the north… I do believe that the opportunities are far wider-reaching than they were 10 or 20 years ago." 

Developing a plan  

These ideas are set to be discussed in upcoming public consultations. 

FedNor's director of program delivery, Lucie Perreault, says developing a strategy is a good idea for Espanola. 

"There's lots of opportunities to go in different ways, and that's why strategic planning is so important," she said. 

Perrault says that by taking stock of the town's resources, geographical location and assets, a clearer picture could emerge. 

"If you have it documented into a plan, then that really helps getting support from anybody, federal or provincial," she said. 

'Huge potential' in forestry, despite mill closures

Northeastern Ontario pulp and paper mills have been dropping like flies in the past two decades, with Espanola being the latest closure. 

Sault Ste. Marie's St. Mary's mill closed its doors in 2011 and sat abandoned for years before being redeveloped into a commercial district, now home to the Algoma Conservatory of Music. 

Iroquois Falls will soon be marking a decade since the closure of their mill, and West Nipissing has recently purchased the former Weyerhaeuser property with plans to redevelop it into housing. 

Ian Dunn, president and CEO of the Ontario Forest Industries Association, argues there's still a lot of untapped economic potential in the province's forestry sector. 

He says capacity has been moving to lower-cost jurisdictions in Central America and Asia over the last 20 years, but that there's "huge opportunity" in the bioeconomy – using forests to produce energy.

"There are investments happening, multi billion dollar investments in the bioeconomy globally. They're just not coming to North America generally." 

He says one way to change that would be for the province to bank on forests in its energy policies. 

"We are one of the only jurisdictions with room to grow in our forest economy," he said.