A pulp mill in northwestern Alberta, operational for over three decades, is set to receive $20 million in modernization funding from the Canadian government to help counter the impact of American tariffs. Mercer Peace River Pulp Ltd. will benefit from Ottawa’s Regional Tariff Response Initiative, aiming to enhance the mill’s competitiveness in a challenging market environment due to the newly imposed tariffs.
The investment will facilitate upgrades to the mill’s facilities and equipment, focusing on enhancing operational efficiency and transitioning production towards a more lucrative mix of hardwood and softwood pulp. This shift is crucial as industry players confront an uncertain future landscape. Located in the boreal forest near Peace River, approximately 150 km northeast of Grande Prairie, the mill has been in operation since 1990, providing employment for around 360 individuals in the region.
Mayor Shelly Shannon emphasized the mill’s vital role in the town’s economic stability, noting the relief felt by residents upon hearing the funding news. Concerns arose following recent mill closures across Canada and the looming threat of industry tariffs, with fears that the Peace River operation could face a similar fate.
The forestry sector in Canada is anticipated to bear a significant brunt from the new 50% tariffs imposed by the United States on Canadian goods, affecting billions in wood products such as pulp and paper. With market conditions growing increasingly volatile, numerous pulp and forestry mills have closed in recent years, with more closures anticipated.
The funding announcement, made on Wednesday, will support the mill’s modernization efforts, including preparing for expanded bio-energy production and carbon capture and storage capabilities. Upgrades are expected in various aspects of the mill’s operations, such as process-piping, pulp machine, recovery boiler, and a lime kiln.
Federal Minister Eleanor Olszewski, responsible for Prairies Economic Development Canada (PrairiesCan), highlighted the funding’s role in enhancing the mill’s resilience amid tariff-related challenges and safeguarding local employment opportunities. The federal government’s PrairiesCan program facilitated the funding through a contribution agreement, with Mercer International Inc. expected to repay $19 million of the $20 million starting in 2031.
Part of a broader $7.5 billion support package for Canadian workers and businesses affected by U.S. tariffs, the funding aligns with the government’s strategy to implement counter tariffs on U.S. goods starting from September 8. Olszewski emphasized the Peace River mill’s significance in the region as a key factor in securing the federal investment, following the company’s outreach earlier in the year to make a compelling case for support.
The news of the funding brought relief to Craig Simon, the mill’s longest-serving current employee, who welcomed the investment as a positive development for the facility’s future. Simon, who has dedicated over three decades to the mill and plans to retire in January, expressed gratitude for the support, underscoring its importance for the community and future generations.