Nova Scotia Premier Darrell Dexter and the manager of the Bowater Mersey Paper Co. Ltd. mill near Liverpool announced details of a $23.75-million land purchase on Friday.
The province will buy 10,117 hectares of land in five counties in western Nova Scotia from the struggling mill.
"We are proud of the quality of lands that we're including in the sale," said Brad Pelley, the manager of the mill.
"This land sale is a good deal for both parties."
The land includes forests, old-growth timber stands, ocean and lake frontage, wetlands and some land of cultural significance to the Mi'kmaq.
The largest parcel of 5,665 hectares is in Annapolis County. Most of the land will be used for conservation and approximately 404 hectares have been set aside for the Mi'kmaq for any future land claim settlements.
"This is a significant step," said Chief Gerard Julian, co-chair of the Assembly of Nova Scotia Mi'kmaq Chiefs.
"Usually if we're negotiating or consulting on things, it's usually an afterthought by the governments. Now, they've put us right at the beginning stage of the negotiations."
The land purchase is part of a $50-million government deal to give Bowater Mersey a cash injection to keep the pulp and paper mill operating.
Pelley told reporters the company may seek a license to cut trees on some of the land it sold to the province, but Dexter said conservation will come first.
"Yes, some will become Crown land that will be available for harvest, the vast majority will be for recreation and for conservation purposes," Dexter told reporters.
The announcement comes one day after Bowater extended a shutdown of the mill for another week because of poor market conditions, a reminder of the precarious situation facing the paper industry.
In November, workers voted in favour of a new collective agreement to help the mill stay open after parent company Resolute Forest Products threatened to close it. The new agreement meant that 80 full-time jobs were cut along with other concessions.
The company said the mill's manufacturing, electricity and labour costs had become too expensive and it was not competitive.
Operations at the mill are set to resume Jan. 16.