PORT HAWKESBURY, N.S. - A Nova Scotia mayor who has spearheaded the effort to save an idled paper mill said he was devastated after a Vancouver company stunned the province by suddenly backing out of purchasing the plant.
Port Hawkesbury Mayor Billy Joe MacLean said it was the worst news he has ever heard.
"It was the saddest day of my life," MacLean said in an interview Saturday. "I didn't sleep very well last night."
Pacific West Commercial Corp. issued a statement late Friday saying an unfavourable tax ruling from the Canada Revenue Agency made it impossible to ensure the economic viability of the former NewPage mill in Point Tupper.
The company said that despite the Nova Scotia government's efforts to come up with a compromise to ease the tax burden, both parties decided the tax implications could not be overcome.
"It is extremely disappointing for everyone involved in the year-long effort to restart the mill to realize that we have been unable to achieve our collective goal," company president Ronald Stern said in the statement.
MacLean said he is worried about the 300 employees who have been preparing to start operating one of the mill's two paper machines.
"There's a lot of anxiety," said MacLean. "Everybody's trying to evaluate their own position."
Archie MacLachlan, vice-president of the union that represents the paper mill workers, said the news came as a shock.
"A lot of people had put a lot of time and effort into getting this paper mill back up and running and we felt we were pretty close to the end," said MacLachlan of Local 972 of the Communications, Energy and Paperworkers Union. "There's a lot of people here now that are at a crossroads in their lives."
MacLachlan said the plant is still under creditor protection until Friday. He said a court-appointed monitor will be working next week to determine what's next for the mill.
MacLean said he's not pointing fingers, but rather hoping to work with the federal and provincial governments to attract a new industry to the region.
The province's NDP government had placed a premium on keeping the mill open. With a $25-billion federal shipbuilding contract secured for the largely urban Halifax region, Premier Darrell Dexter wanted some economic success in rural Nova Scotia.
In recent weeks, critics suggested the province had gone too far with Pacific West, repeatedly pointing out that the company was prepared to pay $33 million for the mill while the province had set aside almost four times that amount.
On Friday, the premier said the province's efforts to restructure a $124-million aid package exposed the province to undue financial risk.
The government first announced the fund last month. At the time, it included $66.5 million in loans, $26.5 million of which would be forgiven if certain criteria including wage targets were met.
But the government said last Friday it would sweeten the fund after the Canada Revenue Agency rejected the tax break sought by Pacific West.
Dexter did not immediately return requests for comment, but said in a statement Friday he was disappointed on behalf of the people and businesses in southern Cape Breton. He said the company's move will be devastating for the mill's workers and their families.
"The province fought as hard as it could for those jobs because this government knows good jobs are the lifeblood of rural communities," Dexter said, adding he didn't regret going out on a limb for Cape Breton.
MacLean showed gratitude for the government's attempts to keep the mill in operation.
"We're grateful for that help, and we don't want the help to stop."
Liberal Leader Stephen McNeil said in the end, the government was putting too much money on the table.
"We had major concerns about the way the government was handling this and the amount of money and with the arrangements around power," said McNeil in an interview Saturday. "When you have a cut rate, it means someone else has to pay it."
The tax break request from Pacific West involved a complicated business arrangement with Nova Scotia Power Inc., the province's privately owned utility. The deal would have given the utility a 30 per cent stake in the company.
Progressive Conservative Leader Jamie Baillie said the government erred in yielding to Pacific West "every step of the way."
"I think all Nova Scotia taxpayers were getting nervous about where this might end up," said Baillie on Saturday. "I'm disappointed the mill is closing, but I do believe that the government ended up looking like they were desperate when, in fact, we needed a strong negotiating hand."
The mill opened in 1962 but shut down last September, throwing some 600 people out of work and affecting another 400 forestry contractors. At the time, NewPage cited the high Canadian dollar and increased rates for shipping and electricity as the reasons for its closure.