Newfoundland vs. AbitibiBowater?

Hugo Chavez ain't got nothin' on Newfoundland and Labrador premier, Danny Williams. Ol' Hugh at least pays compensation for expropriating private assets owned by corporations, unlike Williams, who is just taking the assets of forestry company AbitibiBowater (ABH).

AbitibiBowater is threatening legal action under the North American Free Trade Agreement over Newfoundland and Labrador's move to expropriate its resource rights and hydro assets in Grand Falls-Windsor...

“The legislation is an entirely unfounded and unscrupulous attack by the province of Newfoundland and Labrador,” it says.

“The legislation, which is without precedent in Canada, and is reminiscent of decrees emanating from jurisdictions with less democratic traditions, shocks common sensibility.”

The province hastily passed Bill 75 on Tuesday to expropriate the company's hydroelectric assets, water and timber rights in the Grand Falls-Windsor area.

The move came after Montreal-based AbitibiBowater announced it was shutting down a century-old mill in the central Newfoundland region, with the loss of nearly 800 jobs.

The company says its legal advice is that the expropriation is “clearly and unequivocally” illegal under NAFTA and international legal principles.

“While the government of Newfoundland and Labrador appears to wish to punish AbitibiBowater Inc. for the announced closure of the Grand Falls mill, it is the people of Newfoundland and Labrador that stand to suffer from the clear signal being sent by the government that private property rights and the rule of law in the province are expendable,” says the letter, which is copied to the Justice Department in Ottawa.

The law passed by the legislature says all of AbitibiBowater's assets except for its pulp and paper mill will be owned by Nalcor, a recently established provincial Crown corporation. Those assets include dams and power stations. ...

Mr. Williams has said AbitibiBowater broke a century-old “covenant” with the province when it decided to shut down the mill next March, a move that would devastate the Grand Falls-Windsor economy. He pointed to a 1905 agreement that gives AbitibiBowater access to wood and hydroelectricity as long as it runs a milling and logging operation.

Mr. Williams said the government will not compensate AbitibiBowater for the loss of water and timber rights.

Scratch Newfoundland off the list of places to invest.

Comments

[baldguy:]

I think the author has an ax to grind-the company seems to have violated the terms of the original agreement. This article has no place here.

2008 Dec 21 12:18 PM

[User 324102:]

I think you should get your facts correct before publishing an article.. If you were to do some very basic homework on this situation, you would find the that bill that the Newfoundland government has put forward does in fact provide compensation for the physical assets of the company. You are incorrect in your statement above.. What there is no compensation for are the water and forest rights on crown land.. i.e the company does not own the land and was only provided a lease on the rights that called out the requirement for the mill to produce paper.. So, if the company is no longer producing paper, why would they even need the rights to the trees and water? There are 3 reasons I can think of..

1: continue to produce power and sell 100% of it back to the grid. i.e the Newfoundland gov at a profit.
2: cut the trees and ship them to another location outside of Newfoundland to produce.. can you say 3rd world cheep labour?
3: keep the trees where they are and do nothing, but prevent anyone else from being able to use this resource for the creation of paper to allow them to keep the paper supply low therefore increasing paper prices..

We all know that 1 and 3 are most likely and it is 3 that I have the biggest issue with.. This would allow a private company to destroy an economy and put a lock on the resources to prevent anyone else from doing something that would help that economy.. Can we hear your thoughts on that concept? I am a business guy and am not for gov. involvement in most cases, but with the facts on this case, I am not in agreement with what the company seems to be trying to do here.. Could you please do some homework and get back to us? You don't seem to have understood all of the issue the first time..

2008 Dec 22 09:25 AM