Workers at Abitibi-Consolidated's Fort William paper mill in Thunder Bay, Ont., found out Tuesday the company plans to shut down the plant on Feb. 25.

Abitibi said it will close the mill indefinitely, affecting 265 people employed at the mill and 88 employees with the company's woodlands operations.

The mill has an annual production capacity of about 145,000 tonnes of commercial printing papers.

"In spite of the efforts of our people to identify and implement opportunities for cost reductions, current market conditions, combined with high production costs, have led to this difficult but necessary action," said Alain Grandmont, a company senior vice-president, in a release.

Abitibi said the mill has experienced frequent market-related shutdowns over the past six months. It was on the company's review list in 2005 and Abitibi has tried to sell it.

"We will continue to monitor the market to determine when or if production can resume at the mill," said Grandmont.