Domtar Consolidates Forestry Activities in Northwestern Quebec

Montreal, Quebec, Canada 01 May 2008/PRNewswire-FirstCall/ -- Domtar Corporation announced today that it has concluded an agreement in principle with Mr. Claude Bechard, Minister of Natural Resources and Wildlife, on the reallocation of forest harvesting rights in Northern Quebec.

This agreement in principle, which is subject to consultations with local elected officials, First Nation communities and other wood business operators of the region, will allow Domtar to execute its consolidation plan, guaranteeing the reallocation of 665,000 net annual cubic meters for the Val d'Or sawmill and 450,000 net annual cubic meters for the Matagami sawmill, providing the required volume to restore the viability of these operations. Domtar is committed to cooperating with the Minister of Natural Resources and Wildlife throughout the consultation process.

The agreement in principle also calls for the permanent closure of the Lebel-sur-Quevillon sawmilling operations and the reallocation of 276,000 cubic meters to other sawmill operators in this region, namely, Barrette-Chapais Ltee., Les Chantiers de Chibougamau Ltee. and Abitibi-Bowater (Comtois).

"It is with both satisfaction and relief that we have reached this agreement in principle. It will help mitigate the considerable uncertainty felt in this region and hopefully lead to better operating conditions for our Matagami and Val-d'Or sawmills," stated Mr. Jean-Francois Merette, Senior Vice-President, Forest Products, of Domtar. "At the end of the consultation process, we hope that we will be able to put our Val d'Or and Matagami operations on the road to profitability. All of this despite the extremely difficult market conditions our industry is facing and the significant reduction in our harvesting rights since the adoption of Act 71 in 2005 and the implementation of the 'Paix des Braves'," added Mr. Merette.

This reallocation of available forest harvesting rights will permit Domtar to add a third shift at the Val d'Or sawmill and a second shift at the Matagami sawmill. Domtar expects to preserve 800 permanent positions at its facilities in the region as well as secure supplies for its Sullivan remanufacturing facility and the Uniboard Canada Inc. particleboard mill in Val d'Or.

About Domtar

Domtar Corporation (NYSE/TSX:UFS) is the largest integrated manufacturer of uncoated freesheet paper in North America and the second largest in the world based on production capacity, and is also a manufacturer of papergrade, fluff and specialty pulp. The Company designs, manufactures, markets and distributes a wide range of business, commercial printing and publication as well as converting and specialty papers including recognized brands such as Cougar(R), Lynx(R) Opaque, Husky(R) Offset, First Choice(R) and Domtar EarthChoice(R) Office Paper, part of a family of environmentally and socially responsible papers. Domtar owns and operates Domtar Distribution Group, an extensive network of strategically located paper distribution facilities. Domtar also produces lumber and other specialty and industrial wood products. The Company employs nearly 13,000 people. To learn more, visit www.domtar.com.

Forward-Looking Statements

All statements in this press release that are not based on historical fact are "forward-looking statements." While management has based any forward-looking statements contained herein on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside of our control that could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include, but are not necessarily limited to, those set forth under the captions "Forward-Looking Statements" and "Risk Factors" of the Form 10-K filed with the SEC. Unless specifically required by law, we assume no obligation to update or revise these forward-looking statements to reflect new events or circumstances.

Source: DOMTAR CORPORATION