Ottawa involved in AbitibiBowater dispute, Day says

The federal government has confirmed it is now playing a partto help resolvea dispute between AbitibiBowater and the Newfoundland and Labrador government.

AbitibiBowater has threatened legal action under the North American Free Trade Agreement over legislation passed by Newfoundland and Labrador's legislature in December that reclaims the company's timber and water rights.

That move came on the heels of AbitibiBowater's decision to shut down its newsprint mill in Grand Falls-Windsor before the end of March.

AbitibiBowater's corporate offices are in Montreal, but it is headquartered in Delaware.

On Wednesday in the House of Commons, International Trade Minister Stockwell Day was asked by Liberal MP Scott Simms whose riding includes Grand Falls-Windsor, as well as other towns dependent on the mill if he would "stand by the people of my riding and defend them against AbitibiBowater."

"There are discussions going on now with this difficulty between the company and the province of Newfoundland and Labrador," Day replied.

"I have spoken with the CEO of the company and also the premier, and both sides have agreed to enter into discussions. There are negotiations that have to take place and that process is proceeding."

Day did not elaborate.

AbitibiBowater, like other newsprint producers, has been struggling with a global financial crisis and a prolonged slump in consumer demand for newspapers.

In December, the company was issued a delisting warning by the New York Stock Exchange because its stock had dropped below US $1 per share. Three weeks ago, the company won a six-month reprieve from the NYSE when its share price rebounded over the $1 mark.

Premier Danny Williams has said that AbitibiBowater should have no access to the natural resources of central Newfoundland if it is not prepared to use them at a local mill.

Some of the arrangements in the timber rights agreement dateto 1905, when the British company that would build the mill and Grand Falls itself began to pursue a commercial operation there. The mill has operated under several owners since.