The Mark Carney government has stepped in with a C$7.5 million injection to help secure the future of Kap Paper Inc, backing a new Front End Engineering Design (FEED) study that could see the Kapuskasing mill pivot into medium‑density fibreboard (MDF).
The investment, announced over the weekend, was announced by the Honourable Mélanie Joly, Minister of Industry and Minister responsible for Canada Economic Development for Quebec Regions. The FEED study will establish the technical and commercial criteria required for a final investment decision on the new facility.
“Kap Paper is a regional economic driver and provides key integrated support to northeastern Ontario’s softwood lumber industry,” Minister Joly said. “This investment will help the company define its plan to manufacture higher‑value products to diversify revenue streams, stabilise demand for fibre and maximise the economic output of harvested timber. For Ontario, developing these products will help create and maintain jobs and strengthen regional economies.”
It also comes as the federal government ramps up support across Canada’s wider forest‑products sector. In late 2025, Ottawa committed $1.2 billion to strengthen domestic manufacturing, accelerate the adoption of mass timber in public buildings, and reduce reliance on U.S. markets. The package includes $700 million in loan guarantees through the Business Development Bank of Canada and $500 million from 2026–27 to expand Natural Resources Canada programs focused on product and market diversification.
“Canada’s forest sector is a cornerstone of our economy and a source of pride and livelihoods in communities across the country,” Tim Hodgson, Canada’s Minister of Energy and Natural Resources, said at the time. “When the government spends, we will select Canadian suppliers by default — backing Canadian lumber, Canadian jobs and Canadian leadership in sustainable construction.”
