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Jack Knox: Port Alice moves on from mill, but public still paying

After the mill closed, the province was on the hook for the cleanup. The Environment Ministry estimates it will have spent more than $90 million on the site by the end of this fiscal year.
The Neucel plant when it reopened in May 2006. The mill was bought by Fulida in 2011. It closed in 2015. DARREN STONE, VICTORIA TIMES COLONIST

If there were ever any doubt that the Port Alice mill was well and truly dead, that it wasn’t going to come lurching back from the grave yet again like Michael Myers in Halloween 37, or whatever, it was snuffed out last week.

When the old recovery boiler was toppled by explosives, with video of the demolition posted to social media, it felt like the punctuation mark at the end of a story.

Except it wasn’t, not with B.C. taxpayers on the hook for the cost — more than $90 million so far — of cleaning up the toxic mess left behind when the north Island mill was abandoned.

Consider it an example of why the government now wants to safeguard itself against being caught in such a jam again.

The Environment ­Ministry says it is “working on a ­comprehensive strategy to ensure owners of large and high-risk industrial projects have the financial protections in place in the future so that they — not British Columbians — pay the full costs of environmental cleanup if their projects are abandoned.”

The story goes back to the First World War, when Port Alice’s deep moorage made it an ideal spot to open a pulp mill.

The operation remained a north Island economic mainstay throughout the 20th century.

Then things got wobbly.

After the short-lived U.S. owners of the day bolted in 2004, leaving nothing but unpaid debts and bankruptcy, times got so tough that Vancouver Island Lions Clubs decided to collect and ship food and gifts to the ­village in time for that ­Christmas.

Prosperity returned after new investors reopened the mill, now branded Neucel Specialty Cellulose, in 2006. Before committing their money, though, they got the province to agree to accept responsibility for remediation of environmental damage left by former owners.

Being free of that obligation was a key to reopening the mill. The deal did not, however, indemnify the company against future damage.

When the Canadian arm of Chinese textile producer Fulida bought Neucel in early 2011, it seemed like a good fit for a mill whose sulfite dissolving wood pulp went into rayon filament for clothing, as well as products ranging from film and food thickeners to LCD screens.

Almost immediately, though, three challenges arose: Prices for Neucel’s product fell; oil and chemical costs shot up; and the loonie nudged par, bad news for a company that sold its product in U.S. dollars but paid its bills in Canadian.

In 2015, Neucel announced its 400 workers would be idled by a shutdown that was supposed to last six months, but that kept dragging on until one day in February 2019, when a man from China showed up, said he was in charge and stated that the remaining skeleton crew — a dozen or so maintenance workers — should go home, as the company couldn’t make payroll. The mill was abandoned.

Neucel was declared bankrupt in 2020, its $272 million in debt including $235 million to parent company Fulida, $1.8 million to the municipality of Port Alice and $13.4 million to the province.

That wasn’t all it left behind. A receiver’s report said that prior to leaving the mill, the remaining workers had warned the Environment Ministry that “there were a number of hazardous materials on site that, if left unattended, could result in environmental damage to the site and Neroutsos Inlet.”

It was left to the province to step in, with court-appointed receiver Pricewaterhouse Coopers overseeing the work. The latter’s reports speak of disposing of 790,000 litres of hazardous chemicals, 10.2 million litres of spent sulfite liquor that had been sitting in a lagoon, and 4.4 million kilograms of sludge from the wastewater-treatment system, among other items. The reports don’t break down what was historical and what was new, but the bottom line was it needed to be dealt with.

“It was shocking,” says Port Alice Mayor Kevin Cameron of what was left behind. “I never saw anything like it in my life.”

Work to mitigate environmental and safety risks on the site continues. “Demolition of two warehouses is now complete, while demolition work on a third warehouse is ongoing,” the Environment Ministry says. “Work to remove the wharf is under way.”

The ministry estimates it will have spent more than $90 million on the site by the end of this fiscal year. The bill is likely to go much higher, though the ministry says it would be “premature” to estimate how long the work will take or how high the final price tag will be.

The province is also shepherding through what it calls the Public Interest Bonding Policy — more robust requirements of big, high-risk industrial operations, rules meant to ensure taxpayers aren’t left picking up the pieces when such outfits fold.

After an initial public-consultation period last spring, more public engagement is expected this summer. It will be interesting to see the details of a policy that aims to balance the polluter-pay principle against the need to keep industrial operations competitive and financially viable.

The thing is, while the Neucel mill is still causing grief to the government, Cameron says Port Alice itself has largely moved on from what had not only been the only real employer in town, but the source of 70 per cent of its property taxes.

The mayor believes the village’s future will be built around the reclaimed environment. Yes, it was tough losing those high-paying Neucel jobs and taxes (the municipality still can’t afford to open Port Alice’s ice arena), but the upside is that since the mill shut down, the local waters have turned clear again.

Otters and whales have come back. “In the summertime, just about any day of the week you can see humpbacks now,” Cameron says. Kayak companies line up to take tourists for a paddle.

Port Alice’s population of 700 or so might be half what it was a generation ago, but it’s up from a few years back. Enrolment in the K-9 school, which had dropped from a long-ago high of 270 to 47 by 2019, is inching up, Cameron says. The assessed value of a typical single-family home has doubled to $261,000 in four years.

Demographics have shifted, with retirees and people with home-based businesses replacing mill workers. A few new businesses have opened: a coffee shop, a pizza place, a salon ….

The way Pricewaterhouse Coopers and the Environment Ministry have cleaned up the mill site, the future use of which remains uncertain, has made a big difference, the mayor adds. “They’re doing a phenomenal job.”

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