One of the world's largest pulp and paper companies is the buyer for Meadow Lake Pulp Mill, the biggest money-losing government investment in Saskatchewan history.
Industry giant Asia Pulp and Paper Co. Ltd. will pay $38-million for the fixed assets of the mill, which is jointly owned by the provincial government's Investment Saskatchewan arm and Alberta forestry company Millar Western, confirmed the mill's lawyer, Conrad Hadubiak.
The mill, which employs about 150 people, has been under bankruptcy protection since February and the deal must still be approved by Court of Queen's Bench in a hearing slated for next week.
Under the deal, expected to close in late January, Asia Pulp and Paper is pledged to operate the mill for five years, with penalties if it shuts the mill down before that time.
"I think this is good news for the town of Meadow Lake," said Mr. Hadubiak. "We have a purchaser for the mill who is intending to continue to operate the mill and generate the economic activity and preserve the jobs that have been there over the last 12 years."
The deal is being done through a Canadian numbered company which is a subsidiary of Indonesia-based Sinar Mas, which owns Asia Pulp and Paper, said Mr. Hadubiak.
Singapore-based Asia Pulp and Paper, which is already the biggest customer for the pulp produced in Meadow Lake, is estimated to be the sixth-largest paper and paperboard company in the world.
The company went through major financial difficulties in 2001, including a massive default on bank loans and bonds.
It has also been a focus for environmental groups, which accuse the company of being involved in illegal logging of natural forests in China and targeting highly ecologically sensitive forests for conversion into plantations in Sumatra.
"I would see it as being a bad sign that they are coming into Saskatchewan," said Richard Brooks, head of the forest campaign at Greenpeace Canada, in a phone interview from Vancouver.
"This isn't an issue where they're just slightly bad on the environment. They're one of the worst offenders when it comes to protecting the environment, particularly protecting natural forests and forests that have very high conservation values. They rank very, very low on our list of companies operating in places like Asia."
Investment Saskatchewan Minister Eric Cline said he couldn't comment on the company's practices elsewhere in the world.
"But they're not going to have a bad environmental record in Saskatchewan, I can assure you of that," Mr. Cline said. "They, like any mining company or forestry company or other company in Saskatchewan, are going to comply with the laws and regulations of the government of Saskatchewan and we have good environmental laws and regulations."
While Mr. Hadubiak said Asia Pulp and Paper was chosen over another bidder because it made the most lucrative offer, he and Mr. Cline acknowledge the money involved is a far cry from recouping the massive losses racked up by the government over the years.
The province has lost $321.6-million since the deal was agreed to by the former Progressive Conservative government in 1990. The government calculates it has missed out on another $595.7-million in interest that was never paid over that period.