Manufacturer Forscot had intended to create more than 6,000 jobs at the plant at at Invergordon in the Scottish Highlands targeting an estimated annual income of £106m. 

It was intended that the mill produce 550,000 tonnes per year of A+ northern bleached softwood kraft pulp.

However, due to lack of funding and the "unlikelihood of attracting investment in the current economic climate", Forscot has decided not to proceed. The company, which was set up to build the site, will be wound up as soon as possible.

Ed Gillespie, chairman of Forscot, said: "We were always convinced that this was a viable project, and discussions with potential investors and business partners confirmed this belief.

"However, despite the best efforts of the directors, we have been unable to secure funds for the second stage of the development."
It is understood that there will be no redundancies outside the management team, as the only people working on the project were the five directors.

Forscot was set up to develop and operate a large integrated site for the manufacture of forest industry products.