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Richard Garneau, president and CEO of Resolute Forest ProductsChristinne Muschi/The Globe and Mail

Resolute Forest Products Inc. is halting a kraft mill and paper machine at its pulp and paper plant in Fort Frances, Ont., due to what it calls challenging market conditions.

The Montreal-based forestry company said it is shuttering the mill indefinitely as the market for specialty printing papers is expected to remain tenuous. About 239 employees will be affected.

The mill has an annual production capacity of about 200,000 tonnes of market pulp, while paper machine number 5 has an annual capacity of 105,000 tonnes of groundwood specialty printing papers.

"The markets for these products are challenging and are expected to remain so," said Resolute's president and chief executive officer Richard Garneau.

"The kraft mill situation is particularly difficult, given Fort Frances' operating configuration and the recent decision by a key customer to stop consuming the pulp supplied by Resolute to its mill," he added.

The company said the kraft mill's drying capacity is limited to about 40 per cent of its production capacity and therefore it would be "impossible" to continue profitable operation at the mill.

Resolute said it's exploring alternative options for Fort Frances, including making other products.

It added that it is stopping paper machine No. 5 due to a decrease in demand as well as the high value of the Canadian dollar.

"We will monitor market conditions closely and work with key stakeholders to explore ways to improve the mill's cost position," added Mr. Garneau.

The company said the shutdown is expected to be completed by late November.

Resolute said it will work with affected employees and local government to lessen the impact and said it will also consider the affected employees for job vacancies in other company facilities.

This month, the company announced the layoff of 111 employees as it permanently shut down a paper machine at its Laurentide mill in Shawinigan, Que., after a drop in demand for the type of paper produced on that specific machine.

The mill's paper machine No. 10 will stop producing on Nov. 26.

Resolute Forest, formerly known as AbitibiBowater, produces newsprint, commercial printing papers, market pulp and wood products.

The company owns or operates 22 pulp and paper mills and 22 wood products mills in Canada, the United States and South Korea.