Alberta pulp mill under pressure from Trump’s tariffs gets $20M in federal support

Alberta pulp mill under pressure from Trump’s tariffs gets $20M in federal support

Announcement comes as other mills across country face closures

A pulp mill that has operated in northwestern Alberta for more than three decades is getting $20 million in modernization funding from Ottawa to help the operation withstand the pressures imposed by American tariffs.

The federal government announced this week that Mercer Peace River Pulp Ltd. will receive an injection of financial support through Ottawa’s Regional Tariff Response Initiative to help its mill compete in a marketplace increasingly strained by the steep new levies.

The investment will support upgrades to the mill’s facilities and equipment to improve operational efficiency and enable a shift in its production operations toward a more profitable mix of hardwood and softwood pulp, as producers and manufacturers in the industry face an uncertain future.

The operation — nestled in boreal forest a short drive north of the town of Peace River, about 150 km northeast of Grande Prairie — has been operating since 1990 and employs about 360 people in the region.

Peace River Mayor Shelly Shannon said the importance of the mill to the economic stability of the town is critical and news of the funding came as a relief to residents.

Recent mill closures across Canada and the ongoing threat of tariffs on the industry had locals concerned that the Peace River operation could face the same fate, Shannon said.

“People were very worried,” she told CBC News. “Many young families are dependent on it for their livelihood. The community is dependent on it.”

Canada’s forestry sector is expected to be among the hardest hit by the United States' new 50 per cent tariffs on Canadian goods. Billions in wood products, including pulp and paper, will be affected by the tariffs.

Dozens of pulp and forestry product mills have shuttered across Canada in recent years, with a string of impending closures announced in recent months as market conditions grow increasingly volatile.

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The Canfor Sawmill in Fox Creek will be fully closed by the end of September, affecting around 70 jobs. The High Level-based West Fraser Oriented Strand Board Mill curtailed its operations in late April, costing the community 190 jobs. Meanwhile, more than 20 mills have closed across B.C. since 2023, including the impending closure of Canfor’s Northwood Pulp Mill in Prince George.

The federal funding, announced Wednesday, will be used as capital to help the mill modernize operations, and prepare the facility for the expansion of bio-energy production and carbon capture and storage, federal officials said.

The funding will also position the facility for a planned expansion of its bio-energy production and carbon capture and storage operations.

Upgrades are expected with the mill’s process-piping, pulp machine, recovery boiler, and a lime kiln.

Eleanor Olszewski, the federal minister of emergency management and community resilience and minister responsible for Prairies Economic Development Canada (PrairiesCan), who was at the mill for Wednesday’s announcement said the funding will help make the operation more resilient in the years ahead and protect the local jobs it provides.

“Mercer has a plan that will take it through the next couple of years. It wants to modernize operations. It needs to deal with tariff-related challenges,” Olszewski told CBC News.

“The federal government, Canadians, we didn't start this unjustified tariff war. We can’t control what other countries do to us, but what we can control is how we respond.”

The funds were provided through a contribution agreement under the federal government’s PrairiesCan program.

Under the agreement, Mercer International Inc. will be required to pay back $19 million of the $20 million, starting in 2031. The remaining $1 million will be not be repaid by the company.

The funding is part of a new $7.5 billion package for workers and businesses across Canada affected by U.S. tariffs. The federal government is rolling out tariff support and is set launch counter tariffs on U.S goods beginning on Sept. 8.

Olszewski said the Peace River mill received the federal investment partly due to the facility’s importance in the region.

She said the company reached out to PrairiesCan earlier this year and made a strong case for federal support.

“They told us about how difficult and what an impact the tariffs had on them,” Olszewski said.

News of the federal investment came as a relief to the mill’s longest-serving current employee, Craig Simon who has spent more than three decades inside the operation.

Simon, 66, who works as a fiberline day lead, retires in January. His adult son also works at the mill.

He described the federal investment like a weight being lifted off his shoulders. Simon said he now feels confident in the facility’s future.

“I actually started crying during the federal minister’s presentation,” Simon said in an interview.

“I’m thinking about the people I work with here – friends, and the community and my son.”

Eagle Andersen is a reporter for CBC News in Grande Prairie. He previously worked as an associate producer for CBC News in Kamloops, B.C. You can reach him at eagle.andersen@cbc.ca.