Natural Resources Committee on May 30th, 2023

[The Chair, Liberal, John Aldag]

Good afternoon, everyone. I call this meeting to order.

Welcome to meeting number 65 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.

Today's meeting is taking place in a hybrid format, pursuant to the House order of June 23, 2022. Members are attending in person or remotely using the Zoom application.

I'd like to take this opportunity to remind all participants that taking screenshots or photos of your screen is not permitted now that we're in session. Today's proceedings will be webcast and made available via the House of Commons website.

I'd like to take a few minutes, for the benefit of witnesses and members, to go through a couple of things, and then I'll go to Mr. Angus.

Please wait until I recognize you by name before speaking. Mr. Chahal is the only one online.

You know the rules, so I won't go into all of those details.

Members, I'd encourage you to allow sufficient time for witnesses to respond to your questions. I remind everyone that all comments should be addressed through the chair.

I'd also like to welcome Gary Vidal, Randy Hoback, Elizabeth May and Jaime Battiste as special guests to our panel today. Welcome to these members.

Before we go to our representatives from Paper Excellence for their opening statement, Mr. Angus has a point so we'll go to him briefly on that.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you so much, Chair.

I don't want to take much time out, because I know we're running late and we want to hear from our witnesses, but I do want to make the committee aware that I will be bringing forward a motion. I'm going to read it into the record, but I'm not here to debate it today. The motion is:

That, given the fact that the parliamentary committee on Natural Resources has a mandate to examine issues of natural resource policy on behalf of the Canadian people; and given the fact that the committee is attempting to get answers regarding the ownership structure of Paper Excellence that is now reported to be holding 22 million hectares of Canadian forests; and given public reports that this company [has relations with] Asia Pulp and Paper as part of the holdings of the giant Indonesian company Sinar Mas; and that given the outstanding concerns about connections to China based banks and industrial operations, that pursuant to Standing Order 108(1)(a) the committee issue a summons for Jackson Wijaya, of Paper Excellence, to appear at a date and time to be determined by the Chair, but no later than June 20, 2023.

[The Chair, Liberal, John Aldag]

Thank you, Mr. Angus.

We have discussed previously that our jurisdiction doesn't extend beyond Canada, so we can debate that or discuss it when the motion is brought forward.

We're going to move now to our representatives from Paper Excellence.

Thank you for being here again. First of all I'd like to offer a most sincere apology. You had shown up and we were unfortunately cancelled with about five minutes' notice before we started last time, so I truly appreciate your making yourselves available once again to appear before this committee. Your presence is truly appreciated.

I am going to turn right now to Mr. Williams.

I have a clock here. I'll give you five minutes to start. For the members, I use a quick warning system. I give a yellow flag when there are 30 seconds left on the clock. Red means your time's up. Don't stop mid-sentence, but wind up your thoughts and then we'll move on. We'll do this during the rounds of questions as well.

With that, Mr. Williams, the floor is yours. You have five minutes.

[John Williams, Non Executive Chairman of the Board, Paper Excellence Group, Paper Excellence]

Good afternoon, Mr. Chairman and members of the natural resources committee. Thank you for the opportunity to appear before you today.

I want to begin by respectfully acknowledging that we're on the traditional territory of the Anishinabe Algonquin nation.

We're honoured to be here to speak with you about the important work that Paper Excellence Group is doing in Canada and about the future of growth and opportunity for Paper Excellence, the Canadian pulp and paper industry and the Canadian economy.

My name is John Williams, I am the non-executive chairman of the Paper Excellence Group. I'm also the president and CEO of Domtar, where I have held that position since January 2009.

I am joined today by my Paper Excellence Group colleagues. With me are Stew Gibson, chief operating officer for Paper Excellence Canada; Jean-François Guillot, chief operating officer at Fibre Excellence; and Lana Wilhelm, director of community and indigenous relations for Paper Excellence Canada. Together, we are the executives and key members of the team that leads Paper Excellence and oversees its operations in the Canadian market.

Mr. Chairman, we have tabled with the committee a letter from our founder and sole shareholder of Paper Excellence, Jackson Wijaya, with sincere apologies for being unable to appear before the committee due to extensive global business commitments. However, he has asked that the senior leadership team be here in his place to address and respond to the issues and questions raised by the committee.

With that, I'll hand it over to Stew Gibson.

[Stew Gibson, Chief Operating Officer, Paper Excellence]

Thank you, John.

Here in Canada, following Paper Excellence's acquisition of Domtar and Resolute Forest Products, deep companies with deep history in Canada, our 29 mills and operations provide direct employment for over 9,000 Canadians and support an additional 40,000 jobs in communities, many rural, across our country.

Both acquisitions underwent the customary yet rigorous review process by the appropriate regulatory authorities here in Canada. Moreover, at the request of the Minister of Innovation, Science and Economic Development, Paper Excellence communicated its commitment to Canada both in terms of employment and investment in Canada. Paper Excellence has honoured and will continue to honour those commitments.

With that, I'll turn it over to my colleague, Jean-François.

[Jean-François Guillot, Chief Operating Officer, Fibre Excellence, Northern Pulp Nova Scotia, Prince Albert Pulp Inc., Paper Excellence]

Thank you, Mr. Gibson.

In addition to job creation, Paper Excellence is deeply committed to responsible environmental stewardship. To that end, we are constantly exploring new ways to achieve global climate targets, reduce our carbon footprint, minimize waste, and promote responsible resource management. We are constantly investing in new technologies and best practices to ensure that our operations are sustainable for generations to come.

Our commitment to the environment is not strictly limited to meeting our legal obligations. We want to continue building a sustainable business that is resilient in the face of the climate challenges we all face. We believe that our commitment to responsible environmental management will benefit not only our company, but also the communities in which we operate.

I will now give the floor to Ms. Wilhelm, manager of indigenous relations.

[Lana Wilhelm, Manager, Community and Indigenous Relations, Paper Excellence]

Thank you, Mr. Guillot.

Paper Excellence is committed to the long-term journey of reconciliation and building mutually beneficial relationships with indigenous communities in all our operations across Canada.

With some of our mill acquisitions, we inherited a legacy of broken trust and promises with indigenous communities; however, we want to reiterate our willingness to resolve these issues and coexist harmoniously with indigenous communities everywhere we operate.

We're proud of our foundational work under the guidance of over 50 indigenous communities across the country, anchored in our actions, including community investment, business partnerships and stewardship of resources.

[John Williams]

In closing, Mr. Chairman, we're proud to contribute to the growth and prosperity of Canada. As a company, we're committed to building a sustainable business that benefits all Canadians, and we believe that, by working together, we can create a brighter future for generations to come.

Thank you. We look forward to questions.

[The Chair, Liberal, John Aldag]

That's perfect. You're well within your allotted time there. Thank you for that.

Just before we start, in light of this being a study on the Canadian pulp and paper industry, I want to send a quick thank you to all of the men and women who are fighting forest fires right now in Canada. We know that this is an early and unseasonably extreme season, and we need healthy and viable forests to support the industry. On behalf of the natural resources committee, I want to give a shout-out to all of the men and women who are fighting the fires and saving property, lives and much needed natural resources.

With that, we're going to get right into our rounds of questions.

The first round is six minutes for each member. For the Conservatives, we'll start off with Mr. Vidal.

You now have six minutes.

[Gary Vidal, Conservative, Desnethé—Missinippi—Churchill River, SK]

Thank you, Mr. Chair.

I want to thank our guests for being here today. I want to thank you for coming back a second time after the unfortunate circumstances of a couple of weeks ago.

I'm going to get right into this.

There have been a lot of media reports and discussion that suggest close ties between your company here in Canada and APP and Sinar Mas in Indonesia. These reports utilize all kinds of information, whether it be leaked emails, historical letterheads or corporate directory records. All kinds of information is being used to support those claims.

I would like to give you an opportunity to clarify for the committee what the actual relationship is between Paper Excellence's Canadian operations and APP and Sinar Mas.

[Jean-François Guillot]

Mr. Chair, I'll take that question.

There's no relation between APP and Sinar Mas and Paper Excellence. At the beginning, we recognized that, when Jackson Wijaya built the company, he used some or just a bit of resources to build his company. Since that time, we haven't had any interaction with APP. Some of the facts are clear, but some of the rumours that we can read back and forth in the papers are, I'll say, different from the facts.

I'll switch into French now for an example.

The emails that people are referring to are recent—from 2018 and 2019. They were exchanged between Fibre Excellence, which is the French company of which I am president, and Asia Pulp and Paper, or APP. The purpose of the emails was to determine whether APP was interested in purchasing a new product that we had to bring to market. I repeat, these are emails between a customer and a supplier, and they did not aim to control prices and volumes.

[Gary Vidal, Conservative, Desnethé—Missinippi—Churchill River, SK]

Thank you for that.

Ms. Wilhelm, you talked a little bit about the work you're doing in indigenous communities and that relationship. Where I come from, that's very important. As I think some of you know, I come from the little city of Meadow Lake, and that's actually where your first mill in Canada was purchased several years ago.

I was an accountant in that community for 35 years and the mayor for almost 10 years, and I think I have a pretty good grasp of the impact that your mill has had in a small community like that in a fairly remote northern Saskatchewan community. The impact of jobs, both direct and indirect, and the supporting businesses is very significant. I saw it in both my roles, as an accountant and mayor, like I said.

In the city of Meadow Lake, we also have a very close partnership with Flying Dust First Nation and the Meadow Lake Tribal Council. We're literally neighbours, as you know, across the street from each other. I'm also very aware of the impact that the mill has had on the surrounding first nation communities, especially through the Meadow Lake Tribal Council. Saskatchewan has the highest indigenous participation in the forestry sector in Canada at 27%. I'm sure you're well aware of that. Indigenous partnerships in the forest industry are not only beneficial to the communities and the people, but they allow for the voices of indigenous people to be part of the management of the resource in those areas, and I think that is significant as well.

Ms. Wilhelm, could you expand a little further and explain to the committee a little bit deeper what role your company has, and maybe the forestry sector in general, with regard to economic reconciliation with indigenous communities, but also how that is really important in the sustainability of forests because of the partnerships and interaction with those communities?

[Lana Wilhelm]

I really appreciate the member's comments here. Meadow Lake Mechanical Pulp in northern Saskatchewan was our first mill in Canada and as such we consider it a real flagship of indigenous partnerships. For 16 years now, Meadow Lake Tribal Council and nine first nations have an equal partnership with us in the management of the forest management area of northern Saskatchewan.

This is deeply important, not only for the stewardship that the member mentions but also for employment. There are hundreds and hundreds of indigenous jobs in northern Saskatchewan dependent on the running of that mill. Seventy per cent of all of the operations to get fibre to our mill employ indigenous people. Not only that, there are significant revenue streams as well as the stewardship element that is so very key for our operating in a sustainable way, looking at species at risk, cultural values and all of those other really critical elements on the landscape that we are so proud to have in our partnerships up there.

We see our operations in northern Saskatchewan as something we would love to scope out in all of our operations in Canada, because we have such a great opportunity to learn from our long-term relationship with all of those nations up north.

I would also give a mention that there are significant fires burning in northern Saskatchewan so I very much appreciate the committee for noting that also.

[Gary Vidal, Conservative, Desnethé—Missinippi—Churchill River, SK]

I have a 30-second warning so I'll be very quick on this. Can I get you to speak a little bit, in the same line, about what the reopening of the mill in PA might mean to northern Saskatchewan as well, in the same context.

[Lana Wilhelm]

Certainly. As we mentioned, there is significant indigenous opportunity. With the Prince Albert mill restart, we're anticipating a similar impact in terms of indigenous employment.

The project is expected to contribute approximately 1,200 total jobs and of course all the indirect partnerships as a result of that.

Thank you.

[The Chair, Liberal, John Aldag]

There may be opportunities to further explore that as we go around. Thank you.

Our next questioner is Mr. Chahal.

Yo will have six minutes.

[George Chahal, Liberal, Calgary Skyview, AB]

Thank you, Chair.

Thank you to the witnesses for joining us today. Thank you for your opening statements.

I want to start off by understanding a little bit more about how your business operates. I'll start off with Mr. Williams or Mr. Gibson.

Can you tell us a little bit more about the customer base for your company and how much of your business is here in Canada?

[John Williams]

Yes, certainly. If you look at it, obviously we're a net-exporter out of Canada. I'll take Domtar, Resolute and Paper Excellence, the three entities combined, because maybe that would be more helpful to give you the full perspective.

We sell several tens of thousands of tonnes of paper in Canada. We produce more in Canada, actually, than what is sold in Canada. The Windsor, Quebec, mill for Domtar, for example, is extremely important. With regard to pulp, we're a large exporter into North America, into Asia, of course, and across the world. Pulp is very much a global business. Our lumber business is really all a North American business, largely in Canada.

[George Chahal, Liberal, Calgary Skyview, AB]

Can you go a little bit further on your international business? Tell us some of the countries. What are the main export countries where you send your pulp, lumber and paper to?

[John Williams]

The lumber business is really very much North America. It's the United States and Canada.

If you take the pulp business, it's Asia, Southeast Asia and also North America. It's a lot in the U.S., depending on which particular grades we happen to manufacture.

Our newsprint business is very global because, of course, we're talking to large global customers. Our uncoated freesheet business is the kind of paper you see around this room, which will go into printers, etc., in office buildings. Again, 98% of that business is in North America. If you do a rough rule of thumb, we have a slightly higher market share in Canada than we do in the U.S., so about 85% of the business is actually in the U.S. The balance is in Canada.

We also run a distribution business in Canada—just to give you a bit more perspective on the paper business.

[George Chahal, Liberal, Calgary Skyview, AB]

Yes. Very good. You talked about pulp and its being mostly global and international. Who are your large international customers? What are the countries of origin? If you have percentages—

[John Williams]

If you don't mind, I'm not going to give you anything that I would call competitively sensitive, but I'll give you a sense of it.

Our largest customers are towel and tissue manufacturers across the globe, so people like Kimberly-Clark in the U.S. and Canada, Procter & Gamble in the U.S. and Canada, and Kruger products, obviously, in Canada. Hengan in China is a large tissue manufacturer.

Right now, China is probably 30% to 40% of the global pulp business. We're slightly under-represented in China in terms of total market share. Of course, there's Southeast Asia and also southern Europe.

[George Chahal, Liberal, Calgary Skyview, AB]

Would you say that China is your largest international customer? After China, who would it be?

[John Williams]

The U.S. is very much the biggest customer. I should think then it's probably China and Southeast Asia.

[George Chahal, Liberal, Calgary Skyview, AB]

Okay. Very good. Thank you.

Mr. Jean-François Guillot talked about environmental stewardship.

I'd like to know a little bit more about your company's stewardship in Canada, how you have really focused on environmental stewardship and making sure that you have a sustainable operation here in Canada.