Domtar Indefinitely Closes Four Sawmills

Montreal, Quebec, Canada, 11 October 2006 -- /PRNewswire/ -- Domtar Inc. announced the indefinite closure of four sawmills: three in Abitibi, Quebec, and one in Ontario, Canada.

The closures are primarily due to the pressure of higher timber costs and lower demand for both lumber and wood chips. The Matagami and Val d'Or sawmills, which respectively employ about 100 and 125 people, will be closed effective 27 October 2006. The Lebel-sur-Quevillon sawmill, which until recently employed about 125 workers, will be shut down immediately. The Nairn Centre sawmill in Ontario, which employs about 140 workers, will close on 13 October 2006. In addition, these closures will cut production capacity by approximately 400 million board feet of lumber and result in the layoff of approximately 450 forestry workers.

"On the one hand, substantially higher procurement and processing costs for sawlogs have impacted the competitive position of our sawmills in recent years. On the other hand, the slowdown in demand has exerted considerable downward pressure on selling prices for wood products in recent months. These two main factors have led us to make these difficult decisions," said Richard Garneau, executive vice president, Operations.

Meetings have been held with mill management, union representatives, and the approximately 950 employees affected by the closures.

Domtar is the third largest producer of uncoated freesheet paper in North America. It is also a leading manufacturer of business papers, commercial printing and publication papers, and technical and specialty papers. Domtar manages according to internationally recognized standards 18 million acres of forestland in Canada and the United States, and produces lumber and other wood products. Domtar has 8500 employees across North America. The company also has a 50% investment interest in Norampac inc.,the largest Canadian producer of containerboard.