HALIFAX - About 1,000 people working for the NewPage Corp. paper mill in southern Cape Breton will be laid off next month for an indefinite period as the American-owned company struggles to cope with a stronger Canadian dollar and rising rates for shipping and electricity.

The Ohio-based company said Monday its Port Hawkesbury mill has been unprofitable for more than a year. As a result, the plant's two paper machines will be shut down separately on Sept. 10 and Sept. 16.

"Despite the continued dedication and efforts of our team at Port Hawkesbury to drive cost improvements, extremely challenging economic conditions at this location have forced us to make this difficult ... decision," the company's president and CEO, George Martin, said in a statement.

There's about 550 working at the mill itself and another 50 in the company's woodlands operation. About 400 forestry contractors feed the mill with pulp wood.

Premier Darrell Dexter said the sudden loss of jobs at one of the area's largest employers represents a "devastating turn of events."

"I can't think of a more difficult position for the families that will be affected by this decision," Dexter told an impromptu news conference in Halifax. "We want to make sure this kind of event is as short as possible ... I've told (the company) that I am prepared to assist and look for ways to try to help."

Dexter said he planned to meet company executives as early as Tuesday morning.

The rise in the value of the Canadian dollar in comparison with the U.S. dollar has made the mill's products too expensive for some American customers.

"This has been a profound and extended problem, and not just at that mill," Dexter said. "All (Canadian) mills have been under pressure for some time."

He said his government has worked hard to rein in electricity rates by reducing the province's reliance on fossil fuels. Nearly 90 per cent of the province's electricity supply comes from fossil fuels -- most of it coal.

"We needed to deal with this 15 years ago instead of allowing ourselves to continue to be hostage to fossil fuel prices," he said.

Last year, the province introduce an energy strategy aimed at increasing renewable energy production to 40 per cent of the province's total output by 2020.

"We have done more to remove ourselves from the instability of the fossil fuel market than any government in history," Dexter said.

As well, the company and Nova Scotia Power Inc. -- the province's privately owned electric utility -- announced last year they would spend $208 million to build a so-called biomass plant that will generate electricity by burning about 650,000 tonnes of waste wood annually. It remains unclear what will happen with that project.

In June, NewPage and another Nova Scotia paper mill -- Bowater Mersey Paper Company Ltd. of Liverpool -- filed an application for lower electricity rates with the province's Utilities and Review Board. A hearing is slated for Sept. 19, three days after the shutdown of the second machine in Port Hawkesbury.

Officials with NewPage and Bowater have said the mills could be forced to close if they don't get lower rates.

Dexter bristled at the suggestion that NewPage's move is aimed at putting pressure on the independent provincial agency that sets electricity rates.

"I don't think anyone is in the business of toying with people's lives," he said.

Liberal critic Michel Samson said the provincial government has mismanaged the NewPage file.

"We know that ever-increasing power rates, fuel costs and sky-high taxes are a problem for all businesses," Samson said in a statement. "NewPage's closure is proof of this and it is my fear that we will continue to see job losses as a result of Darrell Dexter's economic agenda."

NewPage acquired the Cape Breton plant in late 2007 when it bought Stora Enso's North American assets in a deal worth US$2.5 billion.

Earlier that year, the government wrote a $10-million cheque to Helsinki-based Stora as part of a seven-year, $65-million deal to help keep the plants operating until 2013-14.

NewPage had $3.6 billion in net sales last year. It also operates mills in Kentucky, Maine, Maryland, Michigan, Minnesota and Wisconsin.