Resolute Responds to FSC Mediation Proposal; Seeks Damages from NAFTA
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Resolute Forest Products Inc., Montreal, Que., Canada, has responded to the proposal put forth by FSC International on December 17 to launch a mediation process between interested parties with the goal of identifying solutions to forest management issues in the Canadian boreal forest. The proposal follows Resolute's expression of concern regarding the viability of FSC certification in Canada given several significant challenges.
Resolute firmly believes that any mediation process concerning forest management in Quebec or Ontario must be led by the respective provincial governments, as they are clearly responsible for issues related to forest management planning. These issues include the resolution of disputes between First Nations and the implementation of a caribou conservation strategy, both of which are cited as key areas of focus in FSC International's proposal. According to an article published this week in Le Quotidien, it is not clear whether the Quebec government would be willing to participate in such a process, Resolute notes.
"Beyond the leadership of the provincial governments, it is critical that all of the parties impacted by forestry activities in the boreal forest be involved in any discussion concerning certification," said Richard Garneau, president and CEO of Resolute. "This includes First Nations, local communities, and unions. Of course, we believe that environmental groups should have a voice in the process. Greenpeace, the only ENGO mentioned in FSC's proposal, has been engaged in a campaign of misinformation targeting Resolute. We believe it would be more appropriate to engage with responsible organizations with a track record of constructive engagement in the public policy discourse, to ensure that the process is neutral and fair."
Resolute has not been alone in expressing concerns about the viability of FSC certification in Canada. On Oct. 28, 2015, the Québec Forest Industry Council (QFIC) sent letters expressing concerns to FSC Canada as well as to Laurent Lessard, Quebec's Minister of Forests, Wildlife, and Parks. On Nov. 18, 2015, the Ontario Forest Industries Association (OFIA) sent a letter to Bill Mauro, Ontario's Minister of Natural Resources and Forestry, voicing similar concerns. On Nov. 30, 2015, during an FSC International forum in Bonn, Germany, Minister Lessard called for a resolution to the issues, Resolute pointed out.
According to Resolute, a growing number of Canadian companies have seen their FSC certificates suspended or terminated in recent months, including Arbec, Eacom, and, as recently as this week, Domtar, for a tenure in Ontario. In October 2015, the Coast Forest Conservation Initiative (CFCI) voluntarily terminated its FSC certificate for the Great Bear Rainforest in British Columbia, an area totaling nearly 850,000 hectares.
Resolute said that these developments are indicative of a need to address the significant challenges facing FSC and its membership. Resolute added that it looks forward to participating fully, under government leadership, in any process that is neutral, inclusive, and transparent in the hopes of identifying solutions that benefit all concerned
Resolute reported yesterday it is seeking damages of more than $70-million under the North American Free Trade Agreement, citing losses it blames on the government-aided revival of an idled paper mill in Nova Scotia.
Resolute said in a statement Wednesday that it has filed a notice of arbitration under NAFTA, saying the closure of its Laurentide mill in Quebec was a result of competition from the paper mill in Port Hawkesbury, N.S.
The mill, idled for about a year, was restarted with the aid more than $124-million in government assistance in 2012.
"Resolute contends those measures discriminated in favour of Port Hawkesbury and resulted, among other damages, in the closing of Resolute’s Laurentide mill in October 2014, depriving Resolute of its investment in that mill, and the value of other investments, in violation of the company’s rights under NAFTA as a U.S. investor in Canada."
The company said its is seeking damages for direct losses of some $70-million, as well as unspecified consequential damages "and additional costs and relief deemed just and appropriate by an arbitral tribunal."
Under NAFTA rules, the Government of Canada is responsible for acts taken by provincial governments. Resolute cited competition from the government-subsidized mill in Nova Scotia, as well as falling demand, in announcing the closure of the Laurentide mill in Shawinigan, Que. In explaining its decision at the time, the company said that despite a big drop in demand for speciality papers, it was facing increased competition as a result of the restart of the Port Hawkesbury mill, with a capacity of some 360,000 metric tpy. That was nearly double Laurentide’s capacity of 191,000 metric tpy.
Pacific West Corp. paid $33 million for the paper mill and it reopened it with the help of $124.5 million in provincial assistance promised over 10 years. That was in addition to $36.8 million the Nova Scotia government spent keeping the mill in a so-called hot idle state before striking the deal with Pacific West.
In announcing the Laurentide closing, Resolute also noted that Quebec had high fiber costs and the mill itself was 126 years old. The company had laid off 111 employees in late 2012 after it permanently shut down a paper machine at the plant following a drop in demand.
