Domtar signs memorandum of understanding with province of Saskatchewan for the redevelopment of the Prince Albert pulp mill



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    UFS (NYSE, TSX)

    MONTREAL, Sept. 12 /CNW Telbec/ - Domtar announced today that it has
reached an understanding with the province of Saskatchewan on a plan that
could result in the redevelopment of the Prince Albert facility into a
Northern Bleached Softwood Kraft (NBSK) pulp mill producing 100% FSC certified
softwood pulp for the North American and offshore markets. The annual
production capacity of the redeveloped mill is expected to be approximately
328,000 tonnes.
    "This is an important step towards the redevelopment of the Prince Albert
operation into a world-class facility," said Raymond Royer, President and
Chief Executive Officer of Domtar Corporation. "This, of course, can only be
achieved if the business case demonstrates that the mill will be a first
quartile operation with a Canadian dollar close to par with its U.S.
counterpart," added Mr. Royer.
    The plan provides for an arrangement for a green energy expansion of the
pulp mill, which would include the sale of excess energy produced to
SaskPower, the launch of an FSC certification process on the related Forest
Management Area lands, as well as the eventual construction of a new wood chip
and sorting facility located in close proximity to the mill. There are no
provisions in the plan to restart the paper machine and related sheeters.
    The understanding also includes the intended acquisition by the Crown
Investment Corporation of Saskatchewan (CIC) of a significant portion of
Domtar's equity interest in the Wapawekka sawmill, which will be substantially
expanded. The CIC also plans to acquire all of Domtar's interest in the former
Big River sawmill, which it will target for redevelopment.
    This milestone lays the foundation for a transaction that is subject to a
number of critical conditions. These requirements include the conclusion of
various engineering and feasibility analyses and studies, the development of a
modern and competitive operational design for the pulp mill, consultations
with First Nations, the negotiation and signing of definitive agreements with
all parties involved, as well as approvals from the Domtar Corporation Board
and various regulatory bodies.
    Domtar will continue to work closely in the interim with the province of
Saskatchewan and its Crown Investment Corporation (CIC), as well as with union
leaders and First Nations representatives towards the successful completion of
this project. "We are confident that all parties will collaborate diligently
and constructively to execute this plan," concluded Mr. Royer.

    Domtar Corporation (NYSE/TSX: UFS) is the largest integrated producer of
uncoated freesheet paper and one of the largest manufacturers of papergrade
market pulp in North America. The Company designs, manufactures, markets and
distributes a wide range of business, commercial printing, publication as well
as technical and specialty papers with recognized brands such as First
Choice(R), Domtar Microprint(R), Windsor Offset(R), Cougar(R) as well as its
full line of environmentally and socially responsible papers, Domtar
EarthChoice(R). 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 14,000 people. To learn more, visit www.domtar.com.




For further information:

For further information: Media relations: Michel A. Rathier,
Vice-President, Corporate Communications, (514) 848-5103,
michel.rathier@domtar.com; Investor relations: Nicholas Estrela, Advisor,
Investor Relations, (514) 848-5555 # 85979, nicholas.estrela@domtar.com

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