Domtar Inc. - packaging division to modernize Red Rock Mill.

MONTREAL, Quebec--(BUSINESS WIRE)--Dec. 4, 1995--The Domtar Packaging Division (ME, TSE, NYSE:DTC) today announce that it will modernize its kraft linerboard mill at Red Rock, in Northwestern Ontario.

The $55-million investment program will raise the mill's annual production capacity from 320,000 to 450,000 metric tonnes, an increase of 130,000 tonnes or 40 percent. The project, which involves the upgrading of the pulp and paper sections of the mill, is scheduled for completion in 1997.

"After an in-depth look at our options to improve the competitiveness of the Red Rock mill, this modernization project clearly came out ahead from both economic and operational perspectives," said Stephen C. Larson, Domtar's President and Chief Operating Officer. "This investment will considerably streighten Domtar's position as a major North American producer of kraft linerboard."

"Our decision to invest was also strongly influenced by the commitment and dedication of the mill's employees to improve its performance in the last few years. It augurs very well for the community and for Domtar," Mr. Larson noted.

"Thanks to a low investment per incremental tonne, this project will significantly enhance the overall cost-competitiveness of the mill. The investment provides new capacity at approximately one quarter of the average capital cost per tonnes of a new linerboard mill," Mr. Larson said.

The Corporation recently completed a $25-million secondary effluent treatment facility at the Red Rock mill which can handle the increased capacity.

Domtar is a major North American manufacturer of pulp and paper products and construction materials. A leading manufacturer and marketer of printing and writing papers, Domtar is also a significant Canadian producer of containerboard and corrugated containers and is a major Eastern Canadian lumber producer. Likewise, Domtar is one of the continent's most important manufacturers of decorative panels. In order to ensure sustainable development of forest resources, the Corporation applies an integrated resource management policy.

CONTACT: Denis Couture, [phone]