Demo Permit Seals Fate of $23M Taxpayer-Funded Mill Asset
Updated: Oct 14, 2021
A demolition permit has been issued for the biomass facility that is part of the former Fort Frances mill property. The permit seals the fate of a multi-million-dollar, publicly-funded industrial asset – at the hands of private corporate interests. The facility was used for less than a decade.
This waste was enabled by provincial decision-makers over the short lifespan of the asset. Between 2007 and 2009, Resolute Forest Products received over $20 million in taxpayer money for a biomass boiler in Fort Frances. The purpose of this funding was to support the long-term operations of Resolute’s Fort Frances mill.
But just 5 years later, in 2014, Resolute announced the mill’s permanent closure. The Ministry of Natural Resources and Forestry then sent Resolute a letter stating that it had violated a clause in its funding agreement which required the company to keep the mill operating to receive the funding.
The Ministry demanded that Resolute repay the funds by December 2, 2014 or “implement an alternative remedy that is acceptable to the Ministry”. Resolute's filings with the U.S. Securities and Exchange Commission reveal that for the next 10 quarters (almost 4 years) Resolute not only refused to repay taxpayers, but did not even recognize the $23 million funding as a contingent liability in its public disclosures. In short: Resolute felt entitled to keep taxpayers’ money, despite shuttering the economic asset it was intended for.
The Ministry repeatedly acquiesced to Resolute’s demands, extending its loan repayment deadline 9 consecutive times, to June 30, 2017. The public would never have known more than this, but for a successful freedom of information request by Dougall Media in June 2020. The Minister at the time initially refused to disclose this information when I inquired in 2019.
Dougall Media learned that Resolute and the province executed a settlement agreement on June 29, 2017. The documents produced revealed that the province failed to put in place any conditions on the waiver of the $23 million repayment. Resolute was allowed to pocket the cash, and set the stage to demolish the young facility, all on the basis of questionable representations about their efforts to market the mill to a new operator.
The events which follow make it clear that the province was either politically influenced, willfully blind, or actively misled about these “marketing efforts”. For instance, in 2018, Resolute was requiring interested buyers to enter into non-disclosure agreements which prevented them from speaking to the province about getting access to a wood supply from Crown forests. This made any sale impossible, as Repap Resources would conclude in early 2019.
When the mill properties did change hands – after being sold to a "redeveloper" – Resolute affixed restrictive covenants on the land title. These prevented the properties from being used to produce a wide range of forest products and bar the new owners from securing a forest license from the province.
The biomass facility represents one of the single largest industrial investments in the Rainy River District, and it was made possible through taxpayer money. Less than 12 years later, it is being sold for scrap to line the pockets of Resolute and their demolition partners.
The experience of Fort Frances in the loss of its mill calls for enhanced provincial law and policy to ensure that taxpayer investments in large-scale private industrial projects are subject to rigidly enforced conditions. These conditions should act to protect the public and community interest the funding is meant to support, and mitigate the creep of political influence, corporate lobbyists, and pork barrelling.
Where the availability of public forest resources is at stake, these policies should ensure that economic handouts are tied to licensing measures and concessions to ensure the long-term public benefit of these public resource and financial commitments. We need strict policy to protect high-cost, publicly-funded private business assets from being converted to other corporate purposes after the money changes hands.
Douglas W. Judson
Councillor, Town of Fort Frances