The Government of Canada has announced a $7.5 million investment to support Kap Paper Inc.’s efforts to reposition its operations toward higher-value wood products, with the goal of protecting jobs and reinforcing the forestry economy in Northeast Ontario.
The funding, delivered through the Strategic Response Fund (SRF), will enable Kap Paper Inc. to complete a Front End Engineering Design (FEED) study for a potential medium-density fibreboard (MDF) facility. The study will define the technical and financial criteria required for a final investment decision.
According to the federal government, the proposed MDF project would allow Kap Paper to remain operational while diversifying its product mix toward growth markets. The initiative is also expected to help stabilize demand for fibre from the regional softwood lumber industry and improve the overall value extracted from harvested timber.
The Kap Paper mill, located in Kapuskasing, directly employs approximately 240 workers and supports up to 2,500 indirect jobs across forestry, transportation, and related services in the region.
“Kap Paper is a regional economic driver and provides key integrated support to northeastern Ontario's softwood lumber industry,” said Mélanie Joly, Minister of Industry. She added that the investment would help the company define a pathway toward higher-value manufacturing, while contributing to job creation and long-term economic stability in the region.
The announcement builds on earlier federal support for the company and the broader regional forestry sector. In October 2025, Federal Economic Development Agency for Northern Ontario (FedNor) committed $10 million to help protect more than 2,000 jobs across northeastern Ontario.
Federal officials say the latest investment reflects a broader strategy to support innovation, value-added manufacturing, and workforce retention in Canada’s forest-products sector, particularly in resource-dependent regions facing structural market shifts.
Source: Government of Canada
