Tembec Inc. has made an offer to end the three-month lockout at its paper mill in Pine Falls, Man.

The Montreal-based company has presented the United Steelworkers union, which represents about 250 locked out employees, a settlement offer.

However, a deal wouldn't result in the mill being reopened by Tembec, company officials said Thursday.

Ending the labour dispute will simply clear the way for the mill to be put up for sale, the company said.

The mill, about 130 kilometres northeast of Winnipeg, has been idle since Sept. 1. It is the biggest employer in the community.

Contract talks between the union and the company began Aug. 13, but the two sides were unable to reach a deal. Although they continued talking after the lockout, negotiations definitively halted in October.

The company has been saying it needed a "significant reduction" in labour costs at the paper mill to keep it competitive as demand for newsprint has fallen.

On Tuesday, Tembec officials announced they have decided to sell the mill rather than reopen it. If a buyer isn't found, the mill could be closed for good.

The union has said it was willing to accept wage cuts, but sticking points in negotiations were pension plan changes and severance pay.

On Wednesday, officials at Sagkeeng First Nation said they were considering putting in an offer to buy the mill. Sagkeeng is about 30 kilometres north of Pine Falls.

"We're actively exploring our options, and if it's in our best interest to actively pursue making an offer, then that's something that we'll look at, definitely," said Mike Fontaine, who heads the First Nation's economic development office.