Canada Funds Engineering Study to Convert Kap Paper Mill Into MDF Mill

Canada Industry Minister Mélanie Joly has announced that the government is providing CA$7.5 million to Ontario’s Kap Paper for an engineering study examining the potential conversion of the Kapuskasing forest products mill into an MDF plant, Northern Ontario Business reported (2-3-36).

The funding is not intended for plant refurbishment or for transitioning to new product manufacturing; instead, it supports a Front-End Engineering Design (FEED) study—a critical early planning phase in industrial project development that evaluates technical, economic, and timeline considerations prior to major investment and construction decisions.

In November 2025, Kap Paper CEO Terry Skiffington told a House of Commons committee in Ottawa that he was working on a multi‑million‑dollar financing package to undertake a major plant conversion through a combination of public and private funding.

Skiffington said the pivot from newsprint to MDF would better align with Ottawa’s housing strategy. He projected that the plant conversion could be completed in as little as 30 months once financing is secured.

Both the provincial and federal governments have been subsidizing the struggling mill, which employs 240 workers in Kapuskasing. As a key regional consumer of wood chips and bark, Kap Paper supports an additional 2,500 workers in the forestry and trucking sectors across northeastern Ontario.

In a statement, Joly called Kap Paper a “regional economic driver” that provides essential integrated support to northeastern Ontario’s softwood lumber industry.

“This investment will help the company define its plan to manufacture higher‑value products to diversify revenue streams, stabilize demand for fiber, and maximize the economic output of harvested timber,” Joly said. “For Ontario, developing these products will help create and maintain jobs and strengthen regional economies.”