Good money...
More bailouts for Kruger
Kruger’s paper mill in Corner Brook is a Crown corporation in all but name.
The Government of Newfoundland and Labrador will dump yet more public cash into the paper mill at Corner Brook to keep it afloat.
GNL released last week a letter in which the government would pay almost 19 cents a kilowatt hour as a wholesale price for electricity from Kruger’s power plant at Deer Lake for another year. In exchange, Kruger would keep the mill open and not lay off any workers.
Meanwhile, the company wants to overhaul the plant at an estimated cost of $700 million.
“The diversification project outlines a comprehensive plan to transform the Corner Brook site into a modern, competitive, and sustainable manufacturing complex,” Kruger said in a statement. “As previously announced, the project would include modernization of existing operations, upgrades to site infrastructure, and investments to expand renewable energy capacity and modernize existing hydroelectric facilities, positioning the Mill [sic] among the most competitive of its kind in Canada. In addition to securing the future of the Mill, the project aims to strengthen its supporting operations while also sustaining high-quality employment and reinforcing economic vitality across the region.”
But that will only work with massive federal and continued provincial pay-outs:
Given the scale and complexity of the project, continued alignment among all levels of government, along with the forest industry and other key stakeholders, will be essential to supporting the Mill's future and unlocking its full benefits for Newfoundland and Labrador.
The letter of intent doesn’t commit the company or the provincial government to anything.
Yet.
The mill has been dying since at least 2005 but is on a life-saving injection of public money with little to no chance of recovery. This latest cash feed continues similar cash-dumping schemes that started decades ago but ramped up in the early part of this century with money for silviculture projects, breaks on timelines to improve emissions, cash for worker education, and government electricy purchases at outrageous prices through NALCOR.
As noted here the last time GNL pumped cash into Kruger through NALCOR, the “company started out [in the 1920s] with enormous gifts from the government in land rights, stumpage fees, and tax breaks and since Kruger took over the Corner Brook mill 40 years ago, it’s had more than its share of government help in the decades since. Lots of leniency about installing scrubbers to reduce air pollution. $110 million dropped in a loan [not repaid.] Another agreement to secure the company’s pension plans. And an ongoing set of deals to sell electricity to NALCOR from Kruger’s Deer Lake power plant.” In 2024, the government agreed to buy electricity for 27.5 cents a kilowatt hour.
At some point, now more than 20 years after the mill should have closed, we need to stop throwing good money after bad.
Our forests are still growing, perhaps even faster due to climate change and there are locally owned lumber operations producing wealth and jobs. They would expand and benefit greatly if they had access to Kruger forests. (Requires Kruger to be shut down)
Deer Lake Power recently had to spill large amounts of water over Main Dam. That was a loss to NL of valuable electrical power. WHY?
Is the value to consumers of wood for fire wood greater that other forms of heating, such as electricity and oil, and financially more beneficial to NL than our paper exports?
Could adding Deer Lake power to the Provincial grid mitigate our promised increases in electrical rates?
There is a lot of evidence that closing the mill would would be an enormous benefit to the province,
AND we wouldn's have to continue to pay Kruger subsidies.
Ed, I think you're on to a significant issue here.
Your concerns are very valid. However........it aligns with my concept of Labrador Greener than Ireland ideas , except that the economics should not require govn subsidy. Their ownership of Deer Lake Power Plant, from when about `1928 maybe, is a very valuable asset and getting more valuable being green renewable energy.
Now to add wind generation is a logical move and is what HQ is doing on a big scale. Is not Kruger a Quebec bases company? Seems taking advantage of CFs power and also the island forest and now hydro and wind energy!! Smart by them or dumb govn here ?
Selling hydro power , maybe cost 1 cent and selling it to Nalcor for 27 and now for another year to sell it at about 18 or 19 cents, and then add wind that will cost about 6 cents and sell at triple the price!!
Meanwhile neither Nfld Hydro or Nfld Power is taking advantage of our world class wind resource.
Kruger will benefit from carbon credits and lower import restriction from other countries for low carbon resources. They are in the fore front of the need to move to a greener footprint, and if it can get govn subsidy from NL , why not? Lots of reasons yes. Maybe it fits fits Carneys federal plans, to double electricity and wind helps that. ? Wind for our grid has long been a no no, and distorted studies by the power companies to discourage it, part of the MFs legacy.