Ottawa provides $12 million “exceptional” bailout to Ontario paper mill

The Carney government will provide a $12 million “exceptional one-time” loan to a northern Ontario paper mill to prevent its closure and subsidize operations.

Source: Facebook

The Carney government will provide a $12 million “exceptional one-time” loan to a northern Ontario paper mill to prevent its closure and subsidize operations.

Kap Paper, located in Kapuskasing, said it would be forced to halt operations unless the federal government provided immediate financial support to continue employing its roughly 420 workers.

The company also supports an additional 2,500 indirect jobs in the region.

“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,” Jobs Minister Patty Hajdu wrote in a letter to Kap Paper.

The Federal Economic Development Agency for Northern Ontario will provide the funding through the Northern Ontario Development Program and the Regional Economic Growth through Innovation Plan.

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

Kap Paper previously received $50 million in loans from the Ontario government over the past two years before approaching Ottawa. The Ford government also recently committed to paying another $16.8 million “to stabilize the mill’s operations in the short term.”

According to Hajdu, the mill is “facing closure due to the impact of new tariffs and structural changes in newsprint markets.” She added that 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.”