The owner of the troubled paper mill in Brooklyn is putting off $25 million worth of upgrades, prompting questions about the future of the operation on Nova Scotia's South Shore.

Resolute Forest Products, owner of the Bowater Mersey paper plant, was offered that money in the form of a capital loan last December as part of a $50-million rescue package to secure 2,000 jobs. 

The company was supposed to buy new machinery to make the mill more productive and energy-efficient.

In an email to CBC News, company spokesman Seth Kursman said they haven't used the $25 million yet.

"We have not been able to identify a project within the assigned budget which would help sustain [the mill] long term," he wrote, "especially considering today's export market conditions."

The news comes as mill workers are about to go on their fourth temporary layoff since January. This shutdown will run from June 17 to July 2.

When asked about the future of the mill, Dexter said he expects to hear more from the company soon.

"There is no question that we are continuing to see an erosion in that market that is very difficult. I think ultimately it will be up to the Resolute management to make and explain a decision," he said Thursday.

Dexter said the deepening recession in Europe and the falling Euro are compounding problems for pulp and paper manufacturers.

In Queens County, Clifford Johnson, a retired mill worker, worries this means the end of the mill.

"The place is going to shut down," Johnson said when told the improvements are on hold. "All that money was wasted."

'Cause for concern'

The union representing workers at the mill is more cautious.

"I guess it remains to be seen as more details emerge around this, but it certainly is to me a cause for concern," said Don MacKenzie, with the Communications, Energy and Paperworkers Union of Canada.

The Nova Scotia government has already paid Resolute $25 million for land and training as part of the bailout deal.