RNNR Committee Meeting

     I call this meeting to order.

    Good afternoon, colleagues. Welcome to meeting number 67 of the House of Commons Standing Committee on Natural Resources. Pursuant to Standing Order 108(2), the committee is meeting on the Canadian pulp and paper industry study.

    During the second panel, we'll be going in camera to have a discussion on this study and to continue with the draft report on the study of creating a fair and equitable Canadian energy transformation.

    I would like to welcome back our guests. One of our panellists had to withdraw this morning. One is having some technical problems and is getting in right now.

    A voice: He's here now.

    The Chair: Okay.

    It sounds like everybody is here who is going to be able to join us, so let's jump right into it. We had opening statements last Tuesday, so I thought we could do one six-minute round for each of the parties and then see where we are at that point.

    There may be bells at some point this afternoon. We'll see if we're interrupted or not. If that happens, we'll have to suspend and do the vote. We'll see if our witnesses are able to come back.

    Mr. Angus, before we start, do you have something that you need to raise? Otherwise, we'll get right into the questions. I'd ask that we hold any business until after we deal with the witnesses.

    Go ahead, Mr. Angus.

    Chair, I absolutely share your sense of urgency in getting stuff done. I just wanted to ask something while we're in public.

    We had talked about a motion to summons Mr. Wijaya to appear. Has that summons been sent? Can you just update us on where we're at with that process?

    Okay. I'll be brief.

    Before we went to the full summons, we wanted to reissue a letter of invitation. That was sent. We are in negotiations right now with his office, trying to find a time for him to appear. It does not appear that he will be in Canada before the end of June. I will bring that forward to the committee to look at their wishes. After we're done with these witnesses, we'll have a discussion about the next steps. Mr. Wijaya has expressed a willingness to come and testify before the committee. It just won't be before this session ends. That's the dilemma we're going to have.

    The invitation to the minister has also been issued. We have not had a response to that yet. We've given all available dates that we would be meeting. We're waiting for a response on the minister's invitation as well.

    We can continue that conversation, but first, Mr. Hoback, welcome back to the committee. You're up. If you're ready to go, you have six minutes on the clock.

    Thank you, Mr. Chair.

    I'll start off with you, Mr. Vaillancourt.

    I'm just kind of curious. In Quebec, at the time Paper Excellence took on Resolute Forest Products, were there any concerns with the union in the sector? Were there any issues there that were highlighted and that would have gone to the Competition Bureau or to any agency to say that this shouldn't go forward?

    Chair, I don't know if he's hearing me.

    I'll stop the clock for you.

    Colleagues, we'll have to suspend for a moment and do a sound check. There's obviously a connection issue with Mr. Vaillancourt.

    The Chair: We're okay.

    Mr. Hoback, we'll restart the clock at six minutes. If you want, you can repeat your question from the top. I'm feeling very generous today. The six minutes are yours.

    Mr. Vaillancourt, I just want to make sure you can hear me. Put your hand up if you're getting translation.

    Yes, I hear it.

    Perfect.

    I'm just curious. At the time Paper Excellence purchased Resolute Forest Products, did you or your association have any concerns? Did you raise any concerns to the Competition Bureau? If so, what were those concerns?

    I didn't appeal directly to the Competition Bureau. It's not an option I considered.

    However, there have always been concerns, particularly about woodland caribou and the loss of logging rights. We're worried about running out of raw materials to continue our operations. We are anxious to obtain answers to these questions.

    We're also wondering about the intentions of our new owners. Will the sawmills continue to operate as they do now? What will happen to our hydroelectric dams? So we have a lot of concerns.

     Those are awesome concerns. I agree with you about those concerns.

    However, as far as the forestry, the resource itself, that's administered by the province. Is it not? Whether you have the resource there to cut or not isn't necessarily decided by the federal government. It will be the province that's negotiated with Paper Excellence—or, in this case, Resolute Forest Products—that will basically lease that land out to them to harvest. Is that correct?

    You're right, but we mustn't forget that the federal government threatened to impose a moratorium on all our logging territories if the provincial government didn't take care of it. This has worried the workers. We're wondering if we're going to have the right to go back into the forest to harvest timber.

    There's more concern about being shut down because of federal regulations than about who the owner is or what the ownership structure is. Is that what you're saying to me?

    At heart, all these aspects contribute to fuelling our concerns. We're wondering whether we'll be able to continue to go and cut wood in the forest.

    It's not that we're unhappy about being bought by another company. What worries us is the fact that we don't know its real intentions regarding what it's going to do about us and with the paper mills. Did they buy us just to exploit kraft pulp, or do they intend to continue making paper and lumber? Will this company continue to operate in the typical sectors in which Resolute used to operate? These are questions to which we currently have no answers.

    Yes. Those are hard questions, and I can't answer those for you. I think those are things that we can talk about.

    There is one thing I will say, though, Mr. Moffatt. You talked about Asia Pulp & Paper and its logging practices in Indonesia. I guess I'm just a little concerned. Why would you think Indonesian regulations would apply here in Canada? Why would you think that would be something that we should be concerned about?

    In Saskatchewan, it is the provincial government, along with first nations and along with the corporation—in this case, Paper Excellence—that actually put together the reforestation plan and that does the harvesting plan. How do you take and square that hole, saying that we should look at what they did in Indonesia, which has totally different rules?

    I'm not saying, by any means, that they did the right thing. However, I am saying that, if you think that's going to happen here in Canada, you had better be dreaming because it's never going to happen here in Canada. Why would you even draw that into the equation at this point in time? You know it's not a reality here in Canada.

     I think what's really relevant to take into account is the track record of Asia Pulp & Paper. I think it was very helpful to see the media reporting this week—

    That's the problem. You're looking at a track record with a different administration and a different government. This is the Canadian government. This is the provincial Government of Saskatchewan. I don't care what their track record is. The rules are the rules that you have in Saskatchewan. The harvesting is the harvesting process. The reforesting is the reforesting process. That's done on behalf of the people of Canada and people of Saskatchewan.

     I really don't care. If Paper Excellence is breaking the law, I expect somebody to come down on it hard and make sure that's corrected. Do we not have the proper laws in place, federally and provincially, to make sure that we have the proper harvesting practices in play, as well as the proper reforestation in play? I don't want to be like Mr. Vaillancourt, 20 years from now wondering if I have wood to cut. I want to make sure that the resource is properly harvested and taken care of.

     In your study, are you concerned with Canadian laws? Is that your issue? Any company, whether it's Domtar, Paper Excellence or Weyerhaeuser, is going to follow the laws of Canada.

    In terms of the connections between Asia Pulp & Paper and Paper Excellence, the media reporting this week has been very helpful in pointing out that the government in Nova Scotia saw that Asia Pulp & Paper—in their words, actually—controlled Paper Excellence. I think it's very important to think about the track record of this company in other places around the world where it's operated.

    In terms of your question around the quality of Canadian regulations, I think it's a really important question that you're asking. In particular, this government has said that Paper Excellence will comply with all relevant Canadian laws. However, what we have seen in a lot of the academic literature and in the state of some of the forests across Canada is that a number of those laws aren't up to snuff.

    That should be changed, you bet. If they're not following the law, I agree. They should be enforced to the nth degree.

    I guess I'm just kind—

    We're out of time. That's the six minutes.

    —of concerned that you're taking the media as your source.

    Okay.

    Next up we have Mr. Blois, who will have six minutes on the clock.

    Thank you, Mr. Chair.

    Obviously, we're sitting here in Ottawa today, and a lot of the focus, rightfully so, of this conversation thus far has been on Paper Excellence. The dynamic here is more broadly about the pulp and paper industry in Canada.

    We're sitting here in our nation's capital. Today, of course, there is major smog—or I'll call it smoke—over the city in terms of the forest fires that are happening across the country. My understanding is that more than tenfold of what normally would burn in terms of forests in a given year has already burned in this wildfire season.

    My questions are for Mr. Vaillancourt because I know that some of the fires have been particularly bad in Quebec. I'm wondering about the concern from the manufacturers association in terms of the actual supply of wood into different forestry practices, including pulp and paper. Can he speak about his association's concerns? I presume it's a concern about access to wood, particularly where a number of our forests are being burned, presumably some that would play into his sector.

    Given the raging forest fires, we certainly have concerns about future supply.

    There are surely parts of these forests that were due to be harvested in two, three, four or five years' time. They will no longer exist once the fires have been brought under control. We could then go and get the wood that is still usable, but it has to be done very quickly, because the material degrades very quickly.

    There are a lot of fires burning right now in Quebec. This creates concern about what we'll be able to use in two, three or four years.

     I assume that the majority of the feedstock that actually goes into your manufacturers as part of your association and your group comes from Quebec and that there's not necessarily feedstock coming from outside. Is it fair to say that the majority of what goes into your plant is actually provincially cut and harvested and goes into your process?

    Yes, it's wood cut from our forests that we turn into boards or lumber. We use lumber scraps to make chips, with which we make paper and pulp. So it's still processing. The primary and secondary transformation is done in Quebec.

    I want to ask you just one more question, Mr. Vaillancourt, and then I'll go to Mr. Moffatt.

    Obviously, the focus is on pulp and paper, and that's an important by-product. As we talk about the circular economy and about some of the different opportunities we have in the country, I have sawmills in Nova Scotia, for example, that are looking increasingly to the idea of mass timber as a primary product. That also plays into conversations around wood vinegar products and renewable diesel.

    Can you give a bit of testimony to this committee on the work that you think has to happen, either in Quebec or, indeed, across the country, to expand those types of products—like pulp and paper but others—that can be used to make sure the entire log or the entire tree is being used to the extent that's possible?

    Yes, I can most certainly talk to you about it.

    At our Kenogami mill, we have a project related to the manufacture of cellulose pulp from fibrous material, this product being of better quality. Projects involving the use of forest biomass are being carried out in Quebec to recover what could be considered as waste material in order to transform it into fuel.

    There are currently plenty of innovative ideas in this field that should be highlighted in order to bring them to the fore.

    Thank you very much.

    I'll turn to Mr. Moffatt.

    Obviously, this would be a concern for your organization, which is focused on environmental outcomes. Do you have any thoughts or is there any position that Greenpeace has in relation to forestry practices so that we can try to reduce the likelihood of fires?

     I know that's not always possible, but whether it's increased silviculture or increased targeting harvests, particularly after major weather events.... I think about Nova Scotia, for example. We just had hurricane Fiona. There are hundreds of thousands of downed trees within the forests. In your organization's view, what can be done or what should be done to try to mitigate this in a way that supports the forestry sector but also maybe reduces the risk of major forest fires moving forward?

    Thanks for the question.

    I think two big things need to happen.

    First and foremost, this government needs to get emissions under control. Amongst G7 nations, this government has done a very poor job in reducing our national greenhouse gas emissions, and the science is very clear that without reducing emissions these wildfires are just going to continue to grow year on year.

    I think the other thing that we really need to see happen is to be restoring indigenous governance to the forests. You'll be aware, as will many of your colleagues, the industrialization of many of these forests has severely harmed their resilience in the face of climate change and extreme weather events.

     What I would say is that, in addition to massively reducing the emissions that continue grow in this country, we need to be restoring indigenous governance to the forests so that the fire prevention measures, measures that many nations across the country have conducted here since time immemorial and which colonialism actually disrupted, can be put back in place on the land, so that indigenous guardianship can play an important part in building a more fire-resilient future for the country.

     Thank you. We're out of time on that one.

    We're now going to go to Mr. Simard for six minutes.

    Thank you very much, Mr. Chair.

    Mr. Vaillancourt, for the benefit of the committee, I would like to say that we have set up a monitoring committee with the various unions involved with regard to Resolute Forest Products and that we will be meeting with company representatives next Monday.

    We will produce a report following this study, and I would like you to tell us about the contentious points you intend to raise next Monday at the meeting with the new owners. That way, perhaps we can take them into account in our report.

    Could you tell the committee what you intend to address at next Monday's meeting?

    All right.

    One area of great concern for active workers, and even more so for retirees, is the issue of pension funds. People are wondering whether Paper Excellence will continue to recognize them, because they're loss-making funds and there's no more money coming in. We have to take into account the fact that retirees contribute a great deal to the region's economy.

    We also wonder about Paper Excellence's vision. Will it be different from ours? Does the company intend to keep the forestry market as we've always known it within Resolute, i.e., timber harvesting as well as pulp and paper manufacturing? Did the company buy us out just to make kraft pulp? What do they want to do about our hydroelectric dams?

    It's all about how the company sees things for Quebec after the Resolute purchase. We're very concerned about that.

    Excellent, thank you.

    Earlier, my colleague Mr. Blois talked a bit about the challenge of supply due to forest fires. I know that one of Resolute's challenges is the softwood lumber dispute with the United States. According to the latest figures we received, $583 million from Resolute Forest Products was being held back because of this dispute.

    Do you feel these repercussions, given the lack of investment in facilities?

    Yes, we feel them. It's embarrassing to say to what extent, because we don't have the real numbers. We have the data they want to give us. We certainly don't have the funds. They're being held in trust, so we can't invest in our current processes.

    Excellent, thank you.

    I'd like to talk to you about another subject. Earlier, you talked about the concern over the federal government's threat to issue a decree in relation to the woodland caribou issue. We know that Quebec's plan will be tabled soon, within the next few weeks, since it's due in June.

    I don't want to put words in your mouth, but, if I understand you correctly, for all the unions in the forestry sector, applying the decree is an unacceptable solution.

    Is that correct?

    Yes, that is indeed the case.

    The application of the decree translates, for us, into a loss of supply of raw materials. At the end of the day, this means that it's the workers who will be out of work, because we won't have anything left to process. The forestry industry provides the most jobs in the region. If we take it away, we'll become a ghost region.

    Thank you very much.

    I'd like to ask Mr. Moffatt a quick question.

    Mr. Moffatt, you mentioned the highly questionable practices of Asia Pulp and Paper. When you did an analysis of the issue, did you draw up a comparative statement regarding the different forestry regimes?

    Quebec's forestry regime is different from that of Ontario or Alberta. If we want to analyze the impact of the arrival of a new player like Asia Pulp and Paper, which would run Paper Excellence, we might have to study it in terms of the different forestry regimes.

    Have you done an analysis taking into account the different forestry regimes?

    I'm going to pause the clock here. The bells have just started. A vote has been called. In my understanding, they are 30-minute bells. Then we'll have 10 minutes to vote and 10 minutes to come back. It's going to be 50 minutes.

    I need to ask our witnesses if they are prepared to stay and perhaps come back. The other option would be for us to continue. Mr. Simard has a minute and 25 seconds left on the clock, and Mr. Angus would have six minutes. We can also release our witnesses and then, when we return, we'll come back in camera to continue with our report.

    I turn to the will of the committee. I do need unanimous consent to continue. I want everybody to have their fair turn.

    Charlie, I'll go to you quickly for your input.

     Thank you.

    We have a lot of work to do. I'm asking for the goodwill of my colleagues. I made sure that they had an opportunity to speak. If we finish off this first round, we can shut it down and then go in camera.

    I'm sure we'll be all very collegial when we go in camera, but I would like my opportunity to finish my round of questioning.

    Do we have unanimous consent to finish off the seven and a half minutes?

    Do we need unanimous consent?

    Yes. To go through bells, we can't continue without full agreement from the committee.

    An hon. member: No.

    The Chair: We don't have unanimous consent, so we will have to suspend the meeting at this point.

    I'll get the clerk to check with our two witnesses.

    Thank you so much for coming back this second time. If you are still available in 40 minutes, we have seven and a half minutes of time that we would need from you. If you're unavailable, that is completely your call.

    I'll thank you now for being so flexible in providing your testimony. When we're back in 40 minutes, we'll check to see whether you're here.

    In the meantime, I need to suspend the meeting. We'll see everybody afterwards.

     Welcome back, members.

    Thank you to our witnesses. I didn't mention you specifically, but we have Gilles Vaillancourt and Shane Moffatt. I really appreciate your patience over this last week and these interruptions today.

    We left off with Mr. Simard having a minute and a half on the clock. He did have a question that had been put out there just before we ended. He can paraphrase it, and then I'll start the clock for him. Then we'll go to Mr. Angus for his six minutes. Then we'll suspend and go in camera.

    Monsieur Simard, I'll let you start your question. When you're done, I will start the clock.

    Thank you very much, Mr. Chair.

    Mr. Moffatt, earlier we were talking about Asia Pulp and Paper's questionable practices. In connection with your presentation to the committee last week, I was wondering whether, in your research and analysis, you took into account the fact that there are different forestry regimes in Canada, including the Quebec forestry regime. These forestry regimes often come with standards, which are quite strict.

    Have you done an analysis looking at the different forestry regimes?

    I've been looking at Paper Excellence's takeover of the logging sector in Canada for over a decade now. As part of that work, I've been looking at their operations in a number of different provinces within Canada and jurisdictions outside of Canada. As part of that, I've certainly done a number of analyses of the provincial logging regimes in Ontario, Quebec and British Columbia in particular.

    The purpose of the report that we put out in the fall was to ensure that the Canadian public and our elected officials have as much information as possible so that we can make the most informed choice about this company's next step and its future in Canada.

    I understand very well, but you'll agree with me that Paper Excellence, like any other forestry company, can't do whatever it wants in the forest. The way cutting rights are allocated in Quebec means that companies have to meet certain standards. I know that certain territories are associated with certain mills and activities.

    Do you agree with me that Paper Excellence can't do whatever it wants in the forests of Canada and Quebec?

    I think it's important that we don't underemphasize the influence that a company the size of Paper Excellence will have on these forests.

    It's certainly true to say that there are provincial regimes that put in place certain requirements and standards, many of which are currently quite weak. There's the influence and ability of Paper Excellence to lobby at both the provincial and federal levels. They influence some of the legislation and policies that we see.

    They have a huge impact on the ground. I think it was the Forest Products Association of Canada that provided the figure of 22 million hectares. I think that gives us a sense of the enormous influence that they're going to have over these forests, irrespective of the relative strength or otherwise of the provincial regimes.

    Thank you. We're out of time.

    Now we'll go to Mr. Angus for his six minutes.

    Thank you so much for taking the time to stay.

    There is no other industry in this country that touches as many people as forestry. The towns that rely on it across Canada are completely dependent on it.

    I know some of my colleagues around the table don't think that it's that big a deal that 22 million hectares of Canadian forests were taken up by a single man whose family connections are tied to some very controversial international operations. He's the sole owner.

    I personally think that a question of net benefit should have been asked and wasn't asked when the Domtar and Resolute takeovers were handled by the Wijaya family.

    Mr. Moffatt, we were told by ISED, who didn't bother to do a net benefit test, that the company is based in the Netherlands. Does that seem credible to you?

    That does not reflect our findings of the totality of the ownership structure of Paper Excellence. No.

    I was wondering whether or not ISED didn't bother to check, even though there have been multiple reports about the connections to Asia Pulp & Paper. ISED's guidance on filling out forms is very specific. It's about the ultimate controller's country of origin.

    Why would, for example, Premier McNeil fly all the way to Shanghai to meet with the Wijayas, when government representatives told us that this was set up in the Netherlands? Do you believe that there's a good possibility that this WTO provision that they were talking about is to protect a company that is rooted at their headquarters in Shanghai?

     From what I've seen, that may very well be the case. I haven't seen anything to disprove that.

    Right.

    We've also heard from my colleagues that as long they're here, it's okay, but we look at what happened in Pictou Landing. Boat Harbour lagoon is now the largest toxic site in Nova Scotia. That toxic effluent was being pumped right into the waters, and when the premier and Province of Nova Scotia attempted to get Paper Excellence—Northern Pulp—to clean up the mess, they turned around and shut the mill down, got rid of the workers and launched a $450-million lawsuit against Nova Scotia.

    Would that seem to be part of the pattern that you've tracked of Asia Pulp & Paper's activities elsewhere, in other jurisdictions?

    That would be very consistent with what we've seen from both Sinar Mas and Asia Pulp & Paper in a number of jurisdictions. I think that's a really good example of the kinds of concerns we have around the accountability of Paper Excellence as it takes over forests across Canada.

    I ask that question because we have been told by whistle-blowers from Asia Pulp & Paper that the reason Paper Excellence—which may be Asia Pulp & Paper in some form or another—is in Canada is a fibre grab. Its control of the mills is less important than its control of fibre to feed the big China machine.

    When the mill was shut down in Pictou Landing, Northern Pulp—Paper Excellence—was still allowed to continue cutting, so where did that fibre go?

    That fibre went to Woodland Pulp in Maine. Now, Woodland Pulp in Maine has recently been purchased by the International Grand Investment Corporation, which is Hong Kong-based, and the mill manager, at one point, flew over to Shanghai to meet with—guess who—the Wijayas.

    The Halifax Examiner is telling us that the pulp that was coming from Nova Scotia is now going through the Woodland Pulp operations, which seems to be a front for Asia Pulp & Paper, and that pulp is being transported to China.

    Would it be reasonable to say that we need to look at what kind of benefit there is to Canadians to have this company controlling so much market through so many murky shell companies and shifting our forest products to China?

    I don't know what could be worse. Is it that the government approved this deal, not knowing how deeply connected Paper Excellence is to APP and Sinar Mas, or is it that it knew and it approved it anyway?

     This is because the long-term implications for the logging industry in terms of where the fibre is going to go.... Who is going to be controlling it? Will that be supporting good, local jobs, or will it all be shipped out to build jobs elsewhere? Those are fundamental questions that remain unanswered.

    That is my concern, because I've seen three of our pulp and paper operations shut down, and people are desperate. If the company comes back and says, “We'll continue to cut and save some jobs”, there will be a push to make that happen, but if the company that is shutting those mills down is doing it so that it can continue to cut and ship to China, I have a problem with that.

    I want to close on questioning you. I was contacted by a Canadian executive who told me that, when he had to meet with Asia Pulp & Paper, they told him he had to talk to Jackson Wijaya. Are we being taken for suckers here? Are Jackson Wijaya and the Wijaya family, Asia Pulp & Paper, Sinar Mas...? Are they in control of Paper Excellence? We have not done a review of it. Are they in control of 22 million hectors of forest?

     Is Jackson Wijaya part of Asia Pulp & Paper as far you've been able to ascertain?

    What we have been able to determine is that Paper Excellence is directed by the Sinar Mas group, and Asia Pulp & Paper can be considered a sister company of Paper Excellence within the Sinar Mas family, and directed by Sinar Mas.

    Thank you so much.

    Thank you. We're out of time.

    To our witnesses, thank you again for your flexibility. We really appreciate your being here.

    Colleagues, we're going to suspend now. For those online, there's a separate log-in for the closed session, so log out of this session and then log back in.

    We'll see everybody back in five minutes or less.

    [Proceedings continue in camera]