Neucel plans to pay reduced taxes

Neucel has been in a production curtailment since March of 2015.

With tax season on the horizon, Neucel Specialty Cellulose is a hot topic of debate on the North Island.

Will the Port Alice pulp mill be paying it’s 25 per cent reduced property taxes this year, which totals $674,435?

According to Warren Beatty, Neucel’s Vice-President of Human Resources, he hasn’t heard anything from the company that would suggest it isn’t going to pay.

“I assume they will be paying their taxes,” said Beatty, who then requested the Gazette speak to Fulida (Canada) Holdings Ltd. Chief Financial Officer Miles Lu about the matter.

Lu said in a brief interview over the phone that he received the tax notice two weeks ago and still has to look over the numbers, mainly due to the 25 per cent tax reduction agreement the company entered into with the village back in December, but he did confirm the company is “still going to pay before the end of this month.”

He added the company is currently “negotiating with several potential investors and is trying very hard to re-start the mill.”

Beatty confirmed Neucel does have plans in place, “and there’s always a chance we will begin some work this year to prepare the mill for a possible re-start, but until our owners secure financing and get approval for the plan going forward, I can’t say for certain we will be doing anything in 2017.”

While the company has been mailing out pink slips to employees every two months, with the last group scheduled for Dec. 31, 2017, their collective agreement “allows them to retain their recall rights,” said Beatty, who added “they are still employees of the company, and if we needed them we could call them in. However, their recall rights are actually time-limited. Employees with less than a year of service retain their recall rights for six months — once that ends, then they are effectively terminated.”

Employees with one year or more of employment get 18 months of recall rights from the day of their layoff, plus two additional months for each year of service up to 24 months.

There is no severance when the employees lose their recall rights, “because they weren’t negotiated for in the contract,” said Beatty, who stated severance is only payable “in a couple of different scenarios, such as if there is a permanent mill closure announced. Severance would then be payable under the collective agreement.”

The tax reduction agreement the village entered into with Neucel back in December states that “In recognition of Neucel’s financial circumstances and to seek to limit the risk of the mill being permanently closed, the village has agreed, without having fettered or limited its legislative discretion in any way, to reduce property taxes on the Class 4 Heavy Industrial Lands for 2017 by 25 per cent from the 2016 taxes of $899,260.00, reflecting a total reduction of $224,825.00. In acknowledgment of the village reducing its property tax, Neucel hereby commits to start up the mill operation by Dec. 31, 2017 provided that the village is prepared to accept compliance with ‘start up’ to have been established, if Neucel demonstrates substantial, demonstrable progress towards such start up by that date, even if actual production has not started. Neucel agrees that it will pay the property taxes, net of the reduction amount, on the lands in 2017 by July 31, 2017 and in addition, shall make a further payment to the village on Jan. 1, 2018 of $224,815.00 if it fails to meet the mill startup commitment.”

Neucel has been in a production curtailment since March of 2015. The pulp mill was originally supposed to be shut down for only six months, but the conditions that existed in March (most notably the declining market price for Neucel’s product), continued to exist after the initial sixth-month curtailment and still exist to this day.