MICHIGAN (From news reports) -- The Michigan Strategic Fund board on Tuesday voted to rescind $29.4 million in tax incentives for a $1.06 billion transformation of an Upper Peninsula paper mill after the facility's Swedish owner canceled the project earlier this year.

Gov. Gretchen Whitmer and legislature had approved a $200 million grant for the project at Escanaba Mill earlier last year. The funding, originally earmarked for Billerud U.S. Production Holding LLC, will go back to the general fund, said Otie McKinley, spokesperson for the Michigan Economic Development Corp.

"Also of note, none of that funding was distributed to the company," McKinley said in an email.

In May, Billerud said it would no longer be moving forward with the transformation project that would convert its Escanaba mill to cartonboard production. The company signed a mutual termination agreement for a Forest Products Processing Renaissance Zone development agreement with the Michigan Strategic Fund, officials said. The tax incentive was valued at about $29.4 million when the MSF board approved it in late 2022.

"After in-depth feasibility studies, evaluations, and supplier discussions, we have concluded that the projected return on investment is not sufficiently attractive to proceed with the conversion of Escanaba to cartonboard production," Ivar Vatne, president and CEO of Billerud said in a statement in May. "During the process, conditions have changed and the cost of equipment and services necessary to transform the operations have greatly increased. Instead, we will pursue a higher returning and more moderate investment strategy for our North American mills going forward."

Billerud had not received any local tax benefits, according to an MEDC briefing memo.