Ontario is investing $16.8 million to keep the Kapuskasing Paper Mill operating, protecting nearly 300 jobs at the mill and thousands of indirect positions in the regional forestry sector. The federal government has agreed to add $12 million in support.
The funding follows weeks of discussions between the province, Kap Paper and the federal government. Ontario brought the parties together to discuss a path forward for the company as it faces pressure from U.S. tariffs on Canada’s forestry sector.
“Our government has been at the table from day one, stepping up again and again to protect good-paying jobs in Kapuskasing and across Ontario’s forestry sector,” said Kevin Holland, Associate Minister of Forestry and Forest Products. “We have been clear that Ontario cannot do this alone, and I want to thank the federal government for joining Ontario to help secure the future of Kap Paper, and the workers and northern communities that depend on it.”
Short-term stabilization funding
The combined funding is meant to stabilize mill operations in the short term while the company works to develop a long-term strategy. That strategy includes diversifying products and modernizing operations, according to the province.
Kap Paper’s continued operation will protect 2,500 direct and indirect forestry jobs at regional sawmills and across the forestry sector. The mill and its workers are also a critical part of the local municipality’s revenue base and important to economic development across the region, according to the province.
“As the forestry sector faces growing uncertainty due to U.S. softwood lumber duties and tariffs, Ontario is continuing to do what it takes to protect these vital jobs in the North,” said Mike Harris, Minister of Natural Resources. “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.”
Broader forestry sector investments
Ontario has made other recent investments in the forestry sector as it faces increased U.S. softwood lumber duties and tariff threats. These include:
- $10 million to help sawmills compete in a changing global market
- $72 million through the Forest Sector Investment and Innovation Program to boost productivity, innovation and expand into new market opportunities
- $50 million through the Forest Biomass Program to increase wood harvest and find new uses and markets for Ontario wood
- $20 million this year through the Provincial Forest Access Roads Funding Program, bringing total funding to over $79 million
- $3 million for wood-based construction education, research and training led by organizations such as the Canadian Wood Council and Canadian Wood Construction Research Network
- $25 million in electricity rate relief for forestry businesses through the Northern Energy Advantage Program in 2024-25
The forest sector generated $21.6 billion in revenue from the sale of manufactured goods and services in 2023 and supported 128,000 direct and indirect jobs in 2024.
