CANADA (From news reports) -- Paper Excellence Canada, after failing to re-start paper operations at a Vancouver Island mill, is returning millions of dollars of funding to the provincial and federal government.

In early 2023, Paper Excellence announced that it would be investing nearly $50 million to upgrade paper operations at the Catalyst Crofton mill, re-start the paper machine and put employees back to work. That didn't happen, and a year later, the company announced the indefinite curtailment of paper operations in Crofton.

Now, Paper Excellence has returned $4.5 million in provincial funding that was to go toward re-tooling the paper line, and the company said in a statement that it is "working through the administrative process" of returning the federal funding, too, previously announced as $14.3 million.

Paper Excellence said as far as long-term plans for paper operations at the Crofton mill, there is no change since the indefinite curtailment was announced. The mill's pulp operations, supported by approximately 400 employees, continue production, and "the Crofton team will focus on making the remaining pulp operations cost competitive and aligned with our overall business strategies and direction," the company noted.

A spokesperson from the B.C. ministry of jobs, economic development and innovation confirmed in an e-mail that the $4.5 million has been returned.

"Our thoughts are with the approximately 75 workers and their families in Crofton, who have been impacted by Paper Excellence's January 2024 decision to indefinitely curtail the paper line at Crofton while maintaining their pulp operations - we share their disappointment," the statement noted. "It reinforces that we need to take action to support people and forestry communities that have been impacted by poor market conditions."

Paper Excellence stated earlier this year that market dynamics, inflationary pressures on raw materials, energy costs and lack of domestic fibre supply have increased operating costs, and "these pressures have materially impacted the current and future financial viability of the paper operation."