Domtar plans $73.5 million conversion to 100% fluff pulp production at its Plymouth mill

MONTREAL, Oct. 20, 2009 (Press Release) - Domtar Corporation today announced that it will convert its Plymouth, North Carolina mill to 100% fluff pulp production. This will require a $73.5 million investment, in line with the Company's previously stated capital expenditure levels. Domtar's annual fluff pulp making capacity will increase almost threefold to 444,000 metric tons.

The mill reconfiguration, which will be completed in the fourth quarter of 2010, will also result in the permanent shutdown of Plymouth's remaining paper machine. This will reduce the Company's annual uncoated freesheet production capacity by approximately 200,000 tons. The mill reconfiguration will help preserve approximately 360 positions.

"We are refocusing Plymouth's operations to capitalize on its competitive strengths. As an experienced fluff pulp manufacturer with an established presence in a growing market, we can expand our capabilities with confidence," said John D. Williams, President and Chief Executive Officer. "Plymouth is well-positioned geographically with ready access to export markets through ocean ports as well as competitively-priced fiber ideally suited for the manufacture of premium quality fluff pulp," added Mr. Williams.

Commenting on the permanent reduction of papermaking capacity, Mr. Williams said, "The redirection of orders to other paper mills in our system will help bring up operating rates and lower manufacturing costs. Upon completion, Plymouth will become a world-class fluff pulp operation with direct access to a dynamic export market."

Fluff pulp is bleached softwood cellulose fiber used worldwide in absorbent applications such as baby diapers, feminine hygiene and adult incontinence products.