Resolute clarifies 'misinformation' about Fort Frances mill sale

In advance of a “community discussion” to be held tonight in Thunder Bay, Resolute Forest Products says it wants to clear up some “misinformation” they say has been published in the media.

In a statement emailed to CBC news,  Resolute’s vice-president of corporate communications, sustainability and government affairs, offered points of explanation.

• Fort Frances demands ministry action on kraft mill wood supply
• Fort Frances young professionals hold rally over idled mill

“There has been a lot of coverage regarding Resolute Forest Products' facility in Fort Frances, much of it based on ... lack of information,” Seth Kursman said.

“As a lead figure in the efforts to find a new owner for the Fort Frances mill, we thought it might be useful to offer some clarifications.”

The email detailed several items, and paid particular attention to “comments that Resolute has not been a good partner to First Nation interests.”

“Try to find another company operating in the northwest that has done more,” Kursman said.

“Relative to the sawmill investments in Atikokan and Ignace, there will be $100 million-plus of contracts awarded to First Nations as a result of the sawmill projects.”

He noted the first set are contracts for the hauling of hog fuel, sawdust and sawmill residual chips between the sawmills and the Thunder Bay complex, as well as the hauling of lumber from Ignace to Atikokan for planing at the Atikokan site.

“Over the six-year term of these contracts, the total value is in the $70 million range,” Kursman said.

The second set of contracts relate to yard service contracts that will be handled by First Nation-related entities, he continued.

“Over the six-year term of these contracts, the total value will be in the $30-million range.  These contracts are in addition to work already contracted to First Nation interests for site preparation and civil work related to the construction of the Atikokan sawmill.”
  
Kursman noted Resolute offered to put in place a joint venture for its Fort Frances cogeneration assets, with 40 per cent owned by First Nations, 40 per cent owned by RFP and 20 per cent owned by the Town of Fort Frances.

Sale discussions quashed

Last month, CBC News reported negotiations between a US company and Resolute for the sale of Resolute's idled Fort Frances kraft mill had broken off.

Expera, a specialty paper business, had indicated "a strong interest" in buying the mill, restoring hundreds of jobs. A statement from the town of Fort Frances blamed the failure of negotiations on the fact that Resolute controls the cost of wood in the Fort Frances area, and that Expera Specialty Solutions needs to be able to acquire fibre at a reasonable cost.

“There has been a reference to the fact that high delivered fibre costs have been a deterrent to any deal coming together,” Kursman continued.

“The reality is that Eastern Canada, generally, including northwestern Ontario, is a high-wood-cost region. It is a problem [and] challenge endemic to the region.  To be clear, Resolute offered the same arrangement to each of the parties it spoke to.”

Kursman noted that parties looking at the mill were also given the option of harvesting their own fibre, with saw-log quality logs going to the saw mills, and pulp-quality logs going to the pulp mill.

“This is, by the way, wholly consistent with the long-standing resource utilization aims of the Province of Ontario.”

​Kursman also addressed allegations that Resolute was against the notion of an enhanced sustainable forestry license (eSFL).

“Indeed, Resolute has been clear from the beginning — including with officials from the province and the Town of Fort Frances and their advisor — that it does not object to an eSFL,” he said.

“Regarding the eSFL topic, any eSFL discussions should allow all of the towns in the region, including Atikokan and Ignace, as well as the First Nation communities, to be constructive participants.”

Story continues after the photo

Protecting its assets

Keeping the Fort Frances mill in "asset protection mode" and available for “repositioning over the last two years have been significant,” the Resolute official noted.

“The mill was taken down in a very orderly manner, to ensure assets were available for redeployment, should a new owner be found. The costs incurred by Resolute to keep the site "heated and lit" were $17.5 million.”

• Unifor frustrated by floundering plans to save Fort Frances mill
• Resolute gets orders from Fort Frances fire department

Kursman added that efforts undertaken by Resolute to find a new owner have been significant.

“The company spoke to parties from China, Asia, Europe, Canada and the US.  Four companies visited the site,” he said.

“Resolute behaved in absolute good faith in its discussions with all parties and made every effort to keep officials of the province aware of who was being talked to, the status of discussions and the possible role that other interested parties could play in getting to a successful outcome.  That included turning the mill over at no cost to a potential buyer and the retaining of all legacy costs.”

The company stated its operating loss since 2009, until closure in January 2014, totalled $88.3 million.        

The “community discussion” meetings in Thunder Bay tonight, and in Atikokan Wednesday night, will be attended by Resolute president and CEO Richard Garneau.