Paul Veldman said his BMI Group wants the highest and best use for the idled pulp and paper plant in Espanola.
The CEO of the southwestern Ontario brownfield redevelopment outfit is targeting late May to finalize a deal with Domtar to acquire the mill, a 16-megawatt hydroelectric asset, plus hundreds of acres of brownfield land and woodlands.
The mill closed in 2023, taking away 450 jobs. Neither BMI or Domtar are disclosing the purchase price.
Veldman said BMI had been spying Espanola as an acquisition target for a year, with discussions with Domtar heating up over the last couple of months when other suitors started coming forward. It culminated in the signing of an asset purchase agreement this week.
Given Domtar’s lack of investment in the Espanola mill over the years, it was highly unlikely that it would ever restart as a pulp and paper operation.
But Veldman said the mill site still has value and potential that aligns with BMI’s vision to transition the site into a “bio hub,” a kind of value-added technology space that could produce biofuels from wood fibre.
With pulp and paper mills closing across Canada and North America, BMI has evolved into a specialty company, skilled at acquiring these facilities to renovate, repurpose and brand them as industrial multi-modal hubs.
BMI owns a roster of former forestry mill properties in Iroquois Falls, Fort Frances, Red Rock and the Niagara Peninsula. Late last year, the company purchased mill properties in Port Huron, Mich., and Baie Comeau, Que.
“We’re positioned in this space as good as anybody would be," said Veldman.
With Espanola, he said they see an asset that’s close to Sudbury — “a behemoth economic driver in mining” — with a rail spur extending onto the property, highway access, and a significant wood fibre basket in the region.
Veldman said BMI has latched onto the global phenomenon of alternative fuels and emerging technologies that create those products from wood fibre.
BMI already houses such a tenant at its Thorold multi-modal site, Char Technologies, which has already made inroads into Northern Ontario. The technology company produces a bio-coal product, derived from scrap wood, for the steel industry.
Veldman said they are in conversations with a number of like-minded technology providers that could be bundled together to share basic infrastructure at a bio-hub facility in a place like Espanola. Ultimately, Veldman said they’d like to host more than 20 tenants on the site.
“That’s a driver for us here,” said Veldman. “As we say, we’d like to put the wood back to work in the region.
“That’s the theme for us in Espanola.”
For Espanola Mayor Doug Gervais, there’s a palpable sense of relief in the community of 5,000 that an interested party finally came forward to purchase the site. It had been known for a while, he said, that the mill, and its aging equipment, was on borrowed time.
“It’s a hopeful situation for the community for sure,” said Gervais, who first met with the BMI Group two weeks ago and came away reassured with the vision they have for the property.
“It’s been idle for a year and half and it’s a light at the end of the tunnel for us.
"Sitting there doing nothing is not good. The longer it sits, the worse it gets.”
Veldman agrees, wholeheartedly.
“The environment takes hold of it. We know what a tree can do to a building foundation or seedlings on a rooftop. If left unattended for too long, nature takes its course.”
He credited the maintenance staff of 34 Domtar caretaker employees with doing a “phenomenal job” of keeping the buildings warm during this down time and hopes they make a decision to join BMI once the transaction is finalized.
BMI stands to inherit more than a million square feet of space within 100 acres of brownfield properties and hundreds more acres of woodland surrounding it.
Some mill buildings will stay, while others will be demolished.
Veldman said some structures were purpose-built to support the pulping operation and may not be easily refurbished. But spaces like the warehouse remain in “tip-top shape” and the papermaking area presents an “interesting opportunity.”
“It’ll be a full analysis, part by part, building by building, and we’ll do that diligently with other industry partners.”
The biggest chunk of change will revolve around capital upgrades to the adjacent hydroelectric power and dam asset, expected to run in the millions of dollars over the next five years.
Since Domtar had a power purchase agreement with the province, some of the upgrading work has already started. Veldman said they have an arrangement to keep that going to extend the longevity of the asset.
In selling their concept to the community, Veldman said they plan to be completely transparent with the municipality, its residents and nearby Indigenous communities with some upcoming town hall meetings planned in the coming weeks.
That’s was a lesson, he said, they learned the hard way in their early days as an ambitious but underfinanced company, then known as Riversedge Developments.
In reflecting on some misunderstandings with some Northern Ontario mill towns, in coming in as a White Knight community saviour, their admitted lack of communication and constant engagement became teaching moments.
“You see opportunity, but opportunity isn’t real if it means not everybody’s bought into it,” said Veldman. “We’re learning that every day.”
It’s why they’re establishing a joint task force for the Espanola project — a “whole community approach” — comprised of local, area First Nation and government stakeholders.
That approach served BMI well in landing Japanese battery supplier Asahi Kasei at one of its Niagara properties in 2024. The multinational company is building a $1.6-billion lithium-ion battery separator plant in Port Colborne.
Veldman called that announcement a “huge turning point” that added credibility to the team they’ve built and the expertise they’ve accumulated.
Their team approach with Niagara regional government stakeholders took on a life of its own that knocked down many hurdles to development, he said. The publicity they’ve garnered bodes well for their future ventures.
“You can’t drive forward without engagement. It can be an Achilles heel.
“Today, we can say we have a very different story and financial support. The company is mature, and we have phenomenal staff that allow us to do these things.”
Veldman said they had a great conversation with the mayor and town officials and plan to meet with nearby Anishnawbek communities in the weeks to come.
“It’s a whole team approach that’s going to make this go.
“We gotta be very cautious because, ultimately, it’s about expectation management. But the prospect of potentially putting that (mill) back to work is extremely exciting.”
