Newsprint giant Kruger Inc. cited the high Canadian dollar Monday as it indefinitely idled some of its capacity at its newsprint mill in western Newfoundland.

Kruger said in a statement it is shutting down one of the machines at subsidiary Corner Brook Pulp and Paper.

Kruger Inc. will indefinitely close one of its machines at Corner Brook Pulp and Paper in November.
(CBC)

The machine, the smallest of four at the Corner Brook mill, produces about 80,000 tonnes of newsprint each year.

"The company regrets having to make such a decision. Unfortunately, the high value of the Canadian dollar leaves us with no other choice," senior vice-president Daniel Archambault said in a statement.

The company's statement did not indicate what effect the indefinite shutdown would have on jobs.

Kathy Dunderdale, Newfoundland and Labrador's minister of natural resources, said Kruger officials last week had raised the "very real potential" of closing two of the four machines in Corner Brook. She said Kruger changed its mind on a second machine.

Dunderdale said the closure of a machine will mean an economic impact well beyond Corner Brook.

"Our direct concern is … to ensure that we're doing everything that we can do to help and support the mill to stay operational," Dunderdale said after meeting with mill workers and city officials.

"Then the next piece is to work with the company and the union to directly help the people who are affected."

In July, Kruger shut down one of the Corner Brook Pulp and Paper machines for two weeks, again citing currency exchange problems. The company also temporarily closed its mill in Trois-Rivières, Que.

Archambault indicated the production cut should not be interpreted as an omen for Corner Brook, a city which was largely built around the mill.

"Our Corner Brook mill remains an important asset for Kruger and we are committed to ensure its long-term viability," he said.

Unfavourable currency exchange has been only one of several serious problems lashing the newsprint industry in recent years. Producers have been cutting capacity and closing plants to cope with a slumping demand for newsprint.

The forestry sector in Newfoundland and Labrador, like the rest of the country, has been hammered hard in the last two years.

In 2005, Kruger competitor Abitibi-Consolidated closed its mill in Stephenville. More recently, it has been demanding concessions to keep its plant in Grand Falls-Windsor at regular production.