Pellet plan shot down for former Abitibi mill

A proposal to make pellets at the former AbitibiBowater mill in Grand Falls-Windsor is dead, CBC News has learned.

In May, Natural Resources Minister Jerome Kennedy confirmed that a company was interested in setting up shop at the former mill site.

"What weve done is engage in these discussions," Kennedysaid at the time.

"There has been a lot of going back and forth. And at this point I cant tell you whether or not the proposal will be accepted, but the discussions have been ongoing and in the last number of months have become, I would say, serious."

Kennedy wouldn't name the company, but said it proposed making wood pellets there.

But the company involved, York Energy, now says the government abruptly cancelled the negotiations and has killed the deal.

Kennedy declined to speak with CBC News about the collapse of the long-gestating plan, which has been in the negotiations stage for nearly four years.

Further complicating matters are lingering questions about York Energyhow much product the company makes, where the pellets are sold, and even where they are actually made.

Who is York Energy?

According to the companys website, York Energy is run by Matthew Fox, who handled e-mail inquiries from CBC.

The website provides details about the type of pellets the company produces.

But more specific information is scanty.

When York Energy came into being in 2008, it posted some company information on an internet business profile site, claiming to produce 120,000 metric tonnes of pellets at a plant in New Brunswick.

But when CBC News called officials in Woodstock, N.B., the town closest to the location of the plant, nobody had heard of it.

The Wood Pellet Association of Canada was similarly perplexed.

"I'm not aware of any pellet plant in New Brunswick that produces 120,000 tonnes and I've never heard of York Energy," association executive director Gordon Murray told CBC News.

"I know all of the pellet plants in New Brunswick. There's five of them. Four of the five are members of our association. The largest of them produces 75,000 tonnes a year. I've just never heard of York Energy."

York Energys Matthew Fox deflected questions about why the association had never heard of his company.

"I can't comment on the Wood Pellet Association of Canada," Fox noted. "We are not members as its activities are geared towards west coast producers."

The association does, however, include members from Nova Scotia and New Brunswick.

Fox indicated that York Energys other investments are all overseas, but said the company just got a timber allotment from another Maritime province something that will be officially announced in the next couple of months.

Plan for central Newfoundland

According to Fox, York Energy was planning to invest $36 million into creating a pellet plant at the site of the former AbitibiBowater paper mill in Grand Falls-Windsor.

It would use part of the building to produce pellets, and partner with a local company that would operate a sawmill facility on another part of the mill property.

Fox said the investment would allow York to produce 240,000 thousand metric tonnes of pellets for a market in the U.K. or Europe. That amount is more than three times as large as production for the largest pellet company in New Brunswick.

The proposal would have seen the province pony up $8 million for upgrades at the port in Botwood, which would be used to store and ship the pellets.

The wood would have come from a harvesting deal with the province involving a 100-kilometre radius around Grand Falls-Windsor.

York Energy claims the deal would have created the equivalent of 340 full-time jobs in the region, for a quarter-century or more.

Fox says negotiations were going well, and the province appeared supportive.

But on Sept. 12, he says he received notice from the government that talks were off.

Big initial ask from company

While the current minister of natural resources isnt talking, his predecessor is.

Shawn Skinner served in the portfolio until his defeat in the 2011 provincial election.

Skinner says York wanted a lot.

"I felt it was very heavy on the ask of government and the people of Newfoundland and Labrador in regards to what they wanted us to give up, and not too specific about what York Energy was going to put in," Skinner said of those initial approaches in early 2009.

"It was very vague and very general. But, in fairness to them, we did enter into a back and forth to try and define some of those parameters. I didn't feel that York was willing to come to the table as government needed it to do. I felt they were trying to get a really good deal here, and felt that maybe government was in a desperate position and needed to get a deal done."

Skinner, who's now working as a consultant, says a client of his has a very early-stage proposal for a very different kind of operation at the mill.

He warns it's still too soon to count on that as a development option, although the government is aware of it.

Local reaction to talks ending

Back in Grand Falls-Windsor, there are fears that the clock is ticking on a new use for the shuttered mill.

"Obviously, the province is going to be faced with the property that's now deteriorating really on a weekly basis," Mayor Al Hawkins said.

'Obviously, the province is going to be faced with the property that's now deteriorating really on a weekly basis. It's not improving. If you don't make investment in it, it's going to be deteriorating.' Grand Falls-Windsor Mayor Al Hawkins

"It's not improving. If you don't make investment in it, it's going to be deteriorating."

And Botwood Mayor Jerry Dean hopes the $8-million request to improve the towns port had nothing to do with the reason the deal died.

"We don't care how it's done, but if we need money from the provincial government to upgrade our port here in Botwood, to facilitate York Energy or anybody else, for the benefit of the town or the benefit of the region, then we expect to be treated the same as other towns and regions have been treated when they found themselves in similar circumstances," Dean said.

Previous plan also faltered

Two years ago, another proposal to re-open the millended in spectacular failure.

That's when word broke that a German paper company with ties to a Canadian businessman expressed interest in the government-owned mill.

But that deal fell apart in a spiral of bankruptcies and unanswered questions.

Abitibi pulled the plug on its central Newfoundland operation in early 2009.

It later emerged that the provincial government had accidentally expropriated parts of the site and an estimated $100 million price tag for environmental cleanup.