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Domtar to Temporarily Cease Operations at its Beauce Sawmills

Press release from the issuing company

MONTREAL, May 14 - Domtar Inc. announced today that beginning on June 7, it will temporarily cease operations at its sawmills in Sainte-Aurelie and Sainte-Marie (Quebec) and this for an undetermined period of time. "The Canada-U.S. softwood lumber dispute has created a volatile situation. It is very hard to predict the impact that the new countervailing and antidumping duties totalling 27.2%, which will be levied around May 23, will have on demand and prices," said Monique Martin, Senior Vice-President, Wood Products Group. "Lately, we experienced a drop in demand for our products, given that a number of American buyers took advantage of the current regulatory vacuum and the absence of duties to build up their inventories. As a result, we now have to scale back our operations in order to maintain a balance between our production and the needs of the market. Despite the efforts of our employees and our partner in the Beauce region to improve the profitability of our operations, the decision to start up sawmilling activities again will depend on the impact of the new duties on lumber prices," added Ms. Martin. A good portion of the fibre supply for Domtar's Beauce sawmills comes from the United States. Given this situation, Domtar asked the Government of Canada to take the necessary actions that would enable the Company to obtain from the American government an exclusion for the products manufactured in these mills from American fibre and shipped back to the United States for sale. This request was turned down. Nevertheless, the Company remains convinced of the strength of its position and has asked the Government of Canada to reconsider its decision. These stoppages will affect some 140 employees of Domtar and 70 employees of our subcontractor. The combined annual production capacity of these mills is 160 million board feet. Domtar will continue to carefully monitor the impact of the new duties on the price of its products and on its own inventory levels. As was already publicly stated, the Company will take the measures necessary to ensure that its production activities comply with the needs of its customers and allow it to maintain profitability.