Abitibi-Consolidated announced Wednesday it is permanently closing its newsprint mill in Stephenville.

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n a statement, the pulp and paper company also announced it is shutting down its mill in Kenora, Ont.

The Stephenville mill has not produced a roll of newsprint since October.

"We could not find a viable long-term solution to return the two mills to profitability," John Weaver, the president and CEO of Abitibi-Consolidated, said.

The company says its decision was difficult, but it could not overcome its challenges with either plant.

The mill in Stephenville has been sitting idle since late October.

Danny Williams

Earlier this week, Premier Danny Williams said the provincial government will unveil a strategy should Abitibi decide to close the mill.

""This company is an extremely – and this is the nicest possible way I can say this – an extremely difficult company to deal with," Williams said.

Among the options government was prepared to consider, Williams said, was expropriating the mill.

Williams said Abitibi-Consolidated had told him it had no interest in selling the Stephenville mill, as that would mean increased activity from a competitor.

However, Williams said he had received informal indications that other concerns might be interested in taking the mill over.

"If there's an interested party that can have that mill up and running, we'd be interested in talking to them," Williams said Monday.

"If that requires expropriation, then that's something we'd certainly consider."

Williams had already extended a long-range offer of energy subsidies worth at least $10 million per year.

However, the offer proved to be moot, as the company was not able to persuade its unionized workforce to accept concessions to its contract.

A final company offer, tendered last Friday, was deemed so unsatisfactory to local Communications, Energy and Paperworkers union officials that they cancelled a planned weekend vote.

About 300 full-time and part-time employees depended on the Stephenville mill for employment.

Abitibi said the closures will result in the permanent removal of 344,000 tonnes of capacity, in addition to 90,000 tonnes previously announced.

The company said it will take writedowns of approximately $155 million and incur mill closure costs of approximately $50 million, of which $35 million is cash, in the fourth quarter.

Abitibi shares were up one cent at $4.29 on the TSX.