​The northwestern Ontario community of Whitesand First Nation is building a biomass and wood processing facility.

The federal and provincial governments announced on Friday in Thunder Bay that they will contribute a collective $3.76 million towards the project.

"It's a privilege to support this project in going forward because this is exactly the kind of innovation that we need in terms of energy production for our country," said Patty Hajdu, minister of employment, workforce development and labour and MP for Thunder Bay- Superior North.

Whitesand First Nation is approximately 250 km north of Thunder Bay and has a population of about 500.

The community currently burns diesel fuel for energy and the new biomass plant will provide a greener alternative.

"Hopefully with this new plant we will have clean energy and keep the environment clean," said Allan Gustafson, chief of Whitesand First Nation.

The new plant will provide power to the town of Armstrong, as well as Whitesand and Collins First Nations and will help power the new wood pellet plant being built alongside the biomass plant.

"This has been a long project in the making going back to the early 1990s," said Michael Gravelle, Ontario's minister of northern development and mines and chair of the Northern Ontario Heritage Fund Corporation.

Initial talks of the biomass plant started in the 1990s but was put on hold for over 20 years.

Whitesand First Nation created a community sustainability initiative in 2009 and discussions around the plant began again.

The First Nation is building what they're calling a "Bio-Economy Centre", which will contain a wood yard, the biomass power generation facility and wood pellet facility.

"It allows them to develop an economy in their own community and provide employment for all of the residents that live in the area," Hajdu.

The facilities will provide 60 full-time jobs to Whitesand and the surrounding First Nations.

"We are short a lot of work up in our area and it will create forestry and everything back for the people of Armstrong and Whitesand," said Gustafson.

Construction for the facilities starts Monday and they hope to have the plant up and running as soon as 2019, according to Gustafson.