Domtar Announces Northeastern Ontario Sawmill Restructuring Ticker Symbol : DTC (TSX, NYSE) MONTREAL, Jan. 4 /PRNewswire-FirstCall/ -- Domtar Inc. today announced that it has entered into an agreement with Tembec Inc. that will allow them to restructure their Northeastern Ontario sawmill operations. As a result of this agreement, Domtar will permanently close its sawmill located in Chapleau on March 6, 2005. The boiler and kiln facilities associated with this operation will be sold to Tembec. This will allow Tembec to process the increased lumber output of its neighboring facility with fibre volumes historically associated with the Domtar Chapleau sawmill. Approximately 67 permanent jobs will be affected by this closure, although there will be increased employment opportunities in the Tembec mill due to the increased throughput. This decision will result in asset write-off and closure costs amounting to approximately $14 million. Domtar also announced that it would be adding a third shift at its Elk Lake facility to process wood that has become available due to the closure of the Tembec sawmill in Kirkland Lake, Ontario. The processing of this additional fibre will require 56 additional people beyond those currently working at the Elk Lake facility. The additional wood supply to the Elk Lake sawmill will not only improve its competitive position but also enhance job security for both sawmill employees and contractors involved in harvesting and hauling activities. It will also enable Domtar to leverage the $12 million in capital investments that it has made in Elk Lake in recent years, which include a new kiln, a new planer, saw line improvements and new de-barker and boilers. Domtar also indicated that it would invest in a finger-jointed plant with Tembec. This facility will be located on the site of the Tembec Kirkland Lake sawmill slated for closure. It is expected to create between 70 and 92 jobs, depending on the final plant configuration. "The Ontario lumber industry, including Domtar, is experiencing some very challenging times, notably high energy costs, a declining U.S. dollar, countervailing and anti-dumping duties on softwood lumber exported to the U.S., as well as a forecasted reduction of wood supply. Given these challenges, Domtar welcomes the support from the Ontario Minister of Natural Resources, David Ramsay, in this restructuring, which will enhance the economics and the competitive position of the Elk Lake facility," said Richard Garneau, Senior Vice-President, Forest Products, Domtar Inc. Meetings with employees and union leaders were held earlier today at each of the sawmills impacted by this decision. Domtar notably informed employees at its Chapleau facility that, in keeping with its corporate values, the Company would do its utmost to help employees affected by today's announcement. In fact, Domtar will attempt to re-deploy affected personnel. Moreover, employees that lose their jobs will receive severance packages and will be given access to outplacement services. 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 22 MILLION ACRES OF FORESTLAND IN CANADA AND THE UNITED STATES, AND PRODUCES LUMBER AND OTHER WOOD PRODUCTS. DOMTAR HAS 10,000 EMPLOYEES ACROSS NORTH AMERICA. THE COMPANY ALSO HAS A 50% INVESTMENT INTEREST IN NORAMPAC INC., THE LARGEST CANADIAN PRODUCER OF CONTAINERBOARD. DATASOURCE: DOMTAR INC. CONTACT: Christian Tardif, Acting Director of Communications, (514) 848-5515, Email: christian. ; Source: Richard Garneau, Senior Vice President, Forest Products, (514) 848-5737, Email: ; To request a free copy of this organization's annual report, please go to http://www.newswire.ca/ and click on reports@cnw.

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