The study will establish the key execution criteria necessary for a final investment decision on creating a new medium-density fibreboard (MDF) facility at Kap Paper's newsprint mill in Kapuskasing, Ontario.
Feb. 3, 2026 - Mélanie Joly, Minister of Industry and Minister responsible for Canada Economic Development for Quebec Regions, on Jan. 31 announced that the Government of Canada is investing $7.5 million through the Strategic Response Fund (SRF) to help Kap Paper Inc. complete a Front End Engineering Design (FEED) study to support a pivot in its operations toward growth markets.
Kap Paper operates a paper mill in Kapuskasing, Ontario that has the capacity to produce 220,000 metric tons per year of newsprint. At the end of September 2025, Kap Paper idled production at the mill due to citing "insufficient financial resources to keep the mill in operation."
According to the Government of Canada, the study will establish the key execution criteria necessary for a final investment decision on creating a new medium-density fibreboard (MDF) facility. This facility would keep Kap Paper operational, safeguard employment in Kapuskasing, Ontario, and strengthen the regional economy.
"Kap Paper is a regional economic driver and provides key integrated support to northeastern Ontario's softwood lumber industry," Joly stated. "This investment will help the company define its plan to manufacture higher-value products to diversify revenue streams, stabilize demand for fibre and maximize the economic output of harvested timber. For Ontario, developing these products will help create and maintain jobs, and strengthen regional economies."
In October 2025, the Federal Economic Development Agency for Northern Ontario (FedNor) announced $10 million to support Kap Paper and protect over 2,000 jobs across northeastern Ontario.
The Kapuskasing mill directly employs around 240 workers, while supporting up to 2,500 indirect jobs in the regional forestry and logistics sectors.
The Kapuskasing mill was formerly owned by Rayonier Advanced Materials (RYAM), which took ownership of it after RYAM's acquisition of Tembec. Four years later, in 2021, GreenFirst Forest Products took over the mill operations in Kapuskasing. In 2024, GreenFirst restructured, leading to the formation of the standalone company, Kap Paper.
SOURCE: Government of Canada and Kap Paper