Mercer International will receive C$20 million in federal funding for a modernization program at its Peace River pulp mill in northern Alberta.
The funding, equivalent to approximately US$14 million, is being provided through Prairies Economic Development Canada under the Regional Tariff Response Initiative. It consists of a C$1 million non-repayable contribution and C$19 million in repayable funding, with repayment scheduled to begin in 2031, subject to the contribution agreement.
The investment will support facility and equipment upgrades intended to lower production costs, improve operational efficiency and strengthen the mill’s competitiveness in changing global markets.
Planned work includes upgrades to heavy black liquor piping, the rebuilding of pulp machine rolls, and improvements to the lime kiln and recovery boiler. The projects are expected to improve output, lower emissions and support a more profitable production mix of hardwood and softwood pulp.
The program is also expected to prepare the mill for potential future retrofits involving bioenergy production and carbon capture and storage. It builds on carbon capture work already underway at the facility, including a carbon dioxide capture demonstration unit.
Mercer President and CEO Juan Carlos Bueno said the investment would support the mill’s productivity and competitiveness while reinforcing its role in northern Alberta’s forest products economy.
Ottawa framed the investment as part of its response to newly imposed U.S. tariffs and their effects on Canadian industries, including pulp and paper. The federal government recently announced C$7.5 billion in new and expanded measures for affected businesses and workers, including additional funding for the Regional Tariff Response Initiative.
Operating since 1990, Mercer Peace River directly employs approximately 360 people and supports an estimated 3,000 jobs across Alberta’s forest sector supply chain. According to PrairiesCan, the mill contributes approximately C$1.5 billion annually to the regional economy.
The facility produces bleached market pulp used in tissue, packaging and other cellulose-based products. It also processes pulpwood and residual fibre from regional sawmills, including chips and bark, supporting more complete utilization of northern Alberta’s forest resources.
Mercer International operates pulp, lumber, mass timber, biofuel and other wood-products businesses in Canada, the United States and Germany. Its consolidated annual pulp production capacity totals approximately 2.1 million tonnes.
