Ottawa commits $7.5M for Kap Paper engineering study tied to proposed MDF facility in Kapuskasing

The federal government will provide $7.5 million to Kap Paper Inc. for a Front End Engineering Design (FEED) study tied to a proposed medium-density fibreboard (MDF) facility in Kapuskasing, Industry Minister Mélanie Joly announced Jan. 31, 2026. The funding is being delivered through Innovation, Science and Economic Development Canada’s Strategic Response Fund.

According to the federal news release, the FEED study is intended to set the key execution criteria needed for a final investment decision on whether to build the new MDF facility. The release says the proposed facility would keep Kap Paper operating and safeguard employment in Kapuskasing.

In a statement, Joly said the federal funding will help the company define a plan to manufacture “higher-value products” and diversify revenue.

The Jan. 31 announcement follows earlier federal funding for Kap Paper. In October 2025, the Federal Economic Development Agency for Northern Ontario (FedNor) announced $10 million to support Kap Paper and said the funding would protect over 2,000 jobs across northeastern Ontario.

The federal release also cited employment figures connected to Kap Paper’s Kapuskasing mill, stating the mill directly employs around 240 workers and supports up to 2,500 indirect jobs in the regional forestry and logistics sectors.