New Pulp Giant

Paper Excellence, now one of the largest forest companies in Canada (and possibly the largest), is a complex maze of interlinked corporate ownerships and spin-offs, according to a new report, Papering over Corporate Control: Paper Excellence’s relationship with Asia Pulp & Paper and the Sinar Mas Group.

The report was produced by Greenpeace, the Environmental Paper Network, Rainforest Action Network, and Woods & Wayside International.

The company started with the acquisition of Meadow Lake Mechanical Pulp’s mill in Saskatchewan in 2007, adding two mills in France and two in BC – Howe Sound Pulp & Paper and Mackenzie Pulp – the next year. The following years were ones of rapid expansion right up to October 2022, when the shareholders of Resolute Forest Products voted to accept their purchase by Domtar, a subsidiary of Paper Excellence.

Papering over Corporate Control focuses on the complex structure of ownership – tracing a thread from Asia Pulp and Paper (APP), notorious for logging rainforest in Indonesia, to the Sinar Mas Group owned by Indonesia’s Widjaja family, to the publicity-adverse founder of Paper Excellence – who is also the son of the head of APP.

“This report makes the case that Paper Excellence is, in fact, part of the same corporate group as Sinar Mas and APP. A nexus of factors such as family ties, overlapping management, and lobbyist filings indicate that Sinar Mas controls Paper Excellence, which is the defining characteristic of belonging to a shared corporate group.” To come to this conclusion, the group pored over hundreds and thousands of corporate filings and produced complex flow charts, detailing addresses, family connections, corporate headquarters and directorships.

corporate structure of Paper Excellence and links to Asia Pulp & Paper

Sources: Statistics Canada (Inter-Corporate Ownership database), Kamer van Koophandel, Companies Commission of Malaysia, Greffe du Tribunal de Commerce de Toulouse, Brazil registry via company data service provider, U.S. Securities and Exchange Commission, Companies Registry (Hong Kong), Ministry of Law and Human Rights for the Government of Indonesia, Accounting and Corporate Regulatory Authority of Singapore, Prospectus for Green Fortune Capital Limited’s 2017 bond offering, Bundesanzeiger, Camera di Commercio Padova, Infogreffe. Note: The information presented in this chart is not comprehensive of all directors and shareholdings for the companies shown. Shareholdings and directorships may be based on historic data and may not reflect the current situation.

However, Graham Kissack, currently Paper Excellence’s Vice President of Environment, Health & Safety, and Communications, replied to the report insisting that Paper Excellence was run as an independent company: “There are various factors to think about when building the corporate structure of a business.… These include tax, corporate finance, allocation of corporate liability, and the like. In fact, it is usually necessary to engage accountants, lawyers and other experienced professionals in order to fully understand the latest developments and structures that could be relevant. This is exactly what PE Group has done and we are not different to any other similar business. Accordingly, any suggestion to the contrary in your letter/summary is not correct.”

Corporate maze structures and tropical plantations aside, the amount of forest land now controlled by Paper Excellence in Canada should be of concern. Joshua Martin of the Environmental Paper Network helped the Watershed Sentinel with the numbers.

In response to BC’s Old Growth Strategic Review in 2020, Paper Excellence wrote that in regard to the BC fibre situation, it has limited to no tenure allowing direct access and management of the forest lands [in British Columbia]. “It is a non-integrated pulp manufacturer and largely depends on the purchase of fibre from sawmills and tenure holders to meet the fibre requirements. Overall Paper Excellence consumes roughly 9.2 million m3 of solid wood equivalent or roughly 14.2% of the current provincial annual allowable cut. Old growth forests play an important part of this supply.”

However, in the east of Canada the company does have large forest tenures through its subsidiaries, according to the Natural Resources Defense Council’s 2021 report Pulp Fiction: Canada’s Largest Pulp Producers’ Actions Do Not Match Their Sustainability Claims.

Under Northern Pulp Nova Scotia Corp, Paper Excellence manages 244,733 hectares of land in Nova Scotia, while in 2020, Domtar managed 1,774,000 hectares, almost half of which was FSC-certified.

Resolute Forest Products will bring another 20 million hectares of managed forest land in Ontario and Quebec to Paper Excellence, about one third of which is Forest Stewardship Council certified. Altogether it adds up to management of a hefty 22 million hectares of forest land, something for the Competition Bureau to contemplate.

Source: Company websites and Google Maps

Greenpeace notes that the Canadian and Indonesian governments are now negotiating a bilateral trade agreement that risks further entrenching the control of corporations like Paper Excellence over forests, to the detriment of local communities.

In December, Canada will also host global negotiations under the Convention on Biological Diversity (CBD) to agree on a framework for greater forest and nature protection over the next ten years.