Resolute Forest Products says a struggling paper mill on Nova Scotia's south shore will be closed indefinitely.
The company announced Friday that the Bowater Mersey facility in Brooklyn will be idled starting on Sunday because it is unable to compete as prices decline in export markets.
In December, Premier Darrell Dexter announced a $25-million forgivable loan to the firm in $5-million yearly portions. On Thursday, he said that money to the to keep the mill's two paper machines operating and to help the company make efficiency improvements and upgrade a power plant hasn't been spent yet.
The company says about 320 workers at the mill and associated woodlands will be affected by the indefinite shut down.
Company spokesman Seth Kursman acknowledged that workers made sacrifices to try and save the mill as they agreed to wage concessions as the province offered financial assistance.
"Everything that was really in the direct control of the people here, of government, of stakeholders across the board, people did, they stepped up and it makes the situation that much more frustrating," he said in an interview.
The plant was initially scheduled to shut down Sunday for about two weeks. It was also idled last month, the latest in a series of scheduled down times for the mill since December.
Late last year, unionized workers at the mill voted to cut 110 jobs in an effort to reduce labour costs and help save the operation.
Mr. Dexter said a continued erosion of the pulp and paper market is not helping the forestry sector, which is being flooded by cheaper products from European mills.
The indefinite closure is a blow to the area, which relies heavily on jobs at the mill.
The lifeline thrown to the company in December by the province was valued at a total of $50-million. In addition to the $25-million forgivable loan, the province also spent $23.75-million to buy about 10,120 hectares of woodland from the company.
Another $1.5-million was offered over three years to train workers. So far, $605,000 has been spent on training to improve safety, efficiency and production, said a spokeswoman with the Department of Economic Development.
Mr. Dexter defended the deal on Thursday, saying he wasn't prepared to give up on the plant.
"What would you do? You're going to walk away from the jobs of thousands of people? I think that would just be wrong," he said.