Newfoundland set to take over Abitibi assets
By Allan Dowd
VANCOUVER, British Columbia (Reuters) - The eastern Canadian province of Newfoundland and Labrador will expropriate AbitibiBowater Inc's timber rights and hydroelectric assets when the company closes its remaining newsprint mill there next year, Premier Danny Williams said on Tuesday.
The firm and its predecessor companies had "the privilege" of using the province's natural resources for the past century and now the government is returning them to their "rightful owners -- the people of Newfoundland and Labrador," Williams said.
"It simply makes sense that if Abitibi are not going to continue the operation of a pulp and paper mill and renege on their commitment to our province they will no longer have access to our natural resources," Williams said in a statement to the provincial legislature.
"Abitibi may be compensated for any power-related infrastructure assets which the provincial government takes control of," according to the statement that accompanied the introduction of legislation to take over the property.
AbitibiBowater, North America's largest newsprint maker, announced on December 4 it would permanently close its mill in Grand Falls-Windsor, Newfoundland, as part of a plan to cut costs and pare output due to declining demand. The company will also shut a mill in Tennessee and eliminate 1,100 jobs.
Abitibi was surprised by the province's action, saying it had already told the government it was willing to talk about the future of the assets. It also noted the Williams was not offering to take the mill property itself.
"What does that bring to the mill and the 750 workers?" asked spokesman Jean-Philippe Cote, saying Newfoundland's action would also discourage international investors from looking at the province to expand.
The company is considering possible legal action. Continued...