A British Columbia Supreme Court judge has approved a settlement agreement between the owners of the Northern Pulp mill and the Nova Scotia government. The Northern Pulp mill in Abercrombie Point, N.S., is viewed from Pictou, N.S., Dec. 13, 2019. THE CANADIAN PRESS/Andrew Vaughan

VANCOUVER - A settlement agreement announced last week between the owners of the Northern Pulp mill and the Nova Scotia government has been approved by a British Columbia Supreme Court judge.

The agreement is the result of a court-ordered mediation that began in April 2022 as part of the company’s creditor protection proceedings.

Under the deal approved during a hearing Friday by Justice Shelley Fitzpatrick, mill owner Paper Excellence has withdrawn a $450-million lawsuit against the province and will abandon plans to reopen its idled operation in Nova Scotia's Pictou County.

The B.C.-based company has also agreed to begin a feasibility study for a potential new kraft pulp mill near Liverpool, N.S.

“What will drive this very much is the feasibility of the mill in Liverpool,” said Lance Williams, a lawyer for Northern Pulp. He told the court that the agreement would help avoid what otherwise would have been a lengthy litigation.

“It would have been costly and uncertain for all parties involved,” Williams said.

Sean Foreman, a lawyer with Nova Scotia’s Justice Department, said the agreement represented a comprehensive resolution that is “fair to all sides.”

“It provides crucial certainty to these very complex legal and financial issues … and important protections to pensioners,” said Foreman. “It also provides some new hope for the (forestry) sector, setting a potential new path forward.”

Northern Pulp has been under creditor protection since June 2020. It closed its mill operations that year after it failed to meet the province’s environmental requirements for a new effluent treatment plant. The Liberal government at the time said the mill could no longer dump its waste into Boat Harbour near the Pictou Landing First Nation, after the company had done so for decades.

The agreement with the B.C.-based parent company also deals with $99 million in loans the firm owes the province, and the company has said the pensions of all and current Northern Pulp employees will be fully funded.

If a new mill is considered viable following a feasibility study that Paper Excellence says will take about nine months to complete, the company will pay about $50 million for costs related to the Companies’ Creditors Arrangement Act and $15 million to the province to settle debts. Another $30 million will go toward pension plans.

If the study finds a new mill in Queens County, N.S., isn’t feasible, the pension and creditor arrangements wouldn’t change, but the company will have to pay the province $30 million to settle debts and spend $15 million on the cleanup and closure of the Pictou County mill site.

Following a cabinet meeting on Thursday, Premier Tim Houston said he hadn’t seen any recent information on the amount of contamination at the Northern Pulp site or a cost estimate for the cleanup.

“What happens on the site and how much that will cost in the future won’t really be known until the purpose of the site has been determined,” said Houston. “Let me assure you that the environmental standards and the normal processes that we have will be applied going forward to any future scenario.”

In the meantime, the premier said the company will continue to maintain the site as it has under an existing ministerial order to ensure that the environment is protected.

This report by The Canadian Press was first published May 31, 2024.

— By Keith Doucette in Halifax

News from © The Canadian Press, 2024