Mercer International’s Peace River pulp mill in Alberta will receive C$20 million (US$14 million) in Canadian government funding to support a broader modernization program focused on productivity, bioenergy and preparations for carbon capture and storage.

The funding is being provided by the Government of Canada through Prairies Economic Development Canada (PrairiesCan) under the Regional Tariff Response Initiative.

Of the total, C$1 million is a non-repayable contribution, while C$19 million is repayable, with repayments scheduled to begin in 2031 subject to the contribution agreement.

The support was announced on August 26 during a visit to the Mercer Peace River Pulp mill in northern Alberta.

Funding Supports Broader Mill Transformation

Mercer said the C$20 million will provide capital for its wider transformation plan at Peace River, with the objective of improving the mill’s productivity and modernizing its operations.

The work will also help prepare the facility for potential expansion of bioenergy production and carbon capture and storage (CCS).

Mercer did not provide a detailed breakdown showing how the C$20 million will be allocated among individual projects.

The funding builds on work already underway at the mill, including a carbon dioxide capture demonstration unit.

The demonstration work is particularly relevant as the company evaluates how carbon-management technologies could eventually be integrated with a large pulp manufacturing operation.

Mercer Targets Productivity and Competitiveness

Juan Carlos Bueno, president and CEO of Mercer International, said the investment represents another step in the modernization of the Peace River facility.

“This investment is an important step in the continued modernization of Mercer Peace River,” Bueno said.

He said the program would support improvements in productivity and competitiveness while reinforcing the mill’s role within northern Alberta’s forest-products economy.

The investment comes as Canadian pulp producers face a combination of international competition, fiber and operating costs, trade uncertainty and the capital requirements associated with maintaining and upgrading established manufacturing assets.

For older mills in particular, modernization can be important to improving energy efficiency, reliability and production economics without constructing entirely new pulp capacity.

Bioenergy Could Expand Mill’s Role Beyond Pulp

The inclusion of bioenergy within the transformation plan highlights another area of development for the forest-products industry.

Pulp mills already handle large quantities of biomass and process residues, creating opportunities to integrate renewable energy production with conventional pulp manufacturing.

Mercer’s program is intended to prepare Peace River for an expansion of bioenergy production, although the company has not disclosed the planned additional generating capacity, investment required or implementation timetable.

Similarly, Mercer has not announced the commercial scale or timeline of a future CCS installation at the mill.

The current carbon dioxide capture demonstration project should therefore be viewed as part of the mill’s technology-development work rather than confirmation that a full-scale CCS system has been approved.

Peace River Produces Both Softwood and Hardwood Pulp

The Peace River mill is located in Alberta’s boreal forest region, approximately 500 kilometres north of Edmonton, and has operated since 1990.

Unlike mills specializing in a single market-pulp grade, the facility produces both northern bleached softwood kraft (NBSK) and northern bleached hardwood kraft (NBHK) pulp.

Most of its pulp is sold to customers in North America, with the remainder exported to Asian and European markets.

The facility is an important wood-consuming industrial asset in northern Alberta, connecting pulp production with regional forestry, harvesting, transportation and other supporting activities.

Canadian Funding Targets Mill’s Long-Term Position

The C$20 million commitment comes through Canada’s Regional Tariff Response Initiative, adding public financing to capital already being deployed at Peace River.

The structure of the funding is notable: 95% of the contribution is repayable, with C$19 million due to begin repayment from 2031, while C$1 million is non-repayable.

For Mercer, the immediate objective is not additional pulp capacity but improving the economics and capabilities of an existing manufacturing asset.

That distinction is important as North American pulp producers evaluate how to keep established mills competitive against newer production assets in other regions.

At Peace River, Mercer is combining conventional mill modernization with longer-term work around bioenergy and carbon capture, potentially broadening the role of the facility beyond market pulp production alone.

Mercer International is a forest-products company with operations in Canada, the United States and Germany. The company reports consolidated annual production capacity of 2.1 million tonnes of pulp alongside lumber, engineered wood products, pallets and biofuels.

Last Updated on 28/08/2026 by Jota Machinery