Kap Paper mill to restart operations after getting more money from province, Ottawa

A northern Ontario paper mill will gradually restart operations after receiving nearly $30 million from the federal and provincial governments to keep it from closing, the company said Friday.

Kap Paper said late last month that it was idling operations at the struggling Kapuskasing mill after failing to secure immediate financial support from Ottawa. 

Jobs Minister Patty Hajdu announced Friday that Ottawa will provide a $12-million loan and the province said it would give the mill an additional $16.8 million.

Kap Paper said the investments will help stabilize the forestry sector in northern Ontario and secure a long-term future for the mill, which directly employs about 420 people and supports 2,500 jobs in the region.

“We are deeply grateful to both the federal and provincial governments for standing with us,” Terry Skiffington, CEO of Kap Paper, said in a statement. “This agreement keeps our people working today and gives our employees, our community, and our entire supply chain renewed confidence.”

Kap Paper said work is underway on a phased restart of the mill, with employees coming back “as soon as operationally possible.” It added it will work on a plan to modernize to stay competitive, and the company will share further details after approvals are complete.

Hajdu told Kap Paper that the $12 million would come from two different Federal Economic Development Agency for Northern Ontario programs, with conditions that include regular financial review.

“The federal operating support is an exceptional one-time measure in recognition of the significant role that Kap Paper plays in the regional forest economy and labour market, and to give more time for your company to develop options for long-term competitiveness,” the minister wrote in a letter to Skiffington she posted on X.

“There are expectations that Kap Paper will meet critical milestones in the planning and development of a pivot strategy within a few months.”

Hajdu noted in her letter that Kap Paper is facing closure because of the impact of tariffs and changes in newsprint markets, and that it’s working on strategies to save the company. The loan offer is “not a confirmation of any ongoing operating support nor a positive decision on a longer-term capital investment in Kap Paper,” she wrote. 

The province said in a statement that the joint funding comes after weeks of discussions between the two governments and the mill.

“After weeks of strong advocacy and many discussions, we appreciate that the federal government has joined us in standing up for workers and families that depend on forestry jobs,” Ontario Natural Resources Minister Mike Harris said in a statement. 

Kap Paper previously said that it received $50 million in loans from the Ontario government and had approached Ottawa for funding, but the timing wasn’t “aligning” for a solution to keep the mill open. Officials and residents in the region have urged the two levels of government not to point fingers at each other and to work with the community to save jobs. 

Kapuskasing Mayor Dave Plourde called Friday “a proud day” for the northern Ontario community. 

“When northerners speak up respectfully and stand together, we get results,” he said in a media release. “We thank the province and the Government of Canada for stepping up in partnership with Kap Paper, and we’ll keep working together to build a better tomorrow.”

This report by The Canadian Press was first published Oct. 17, 2025.