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 PORTLAND, Ore., Sept. 1 /PRNewswire/ -- Pope & Talbot Inc., (NYSE: POP) today announced a major new contract customer for pulp made at its Halsey, Oregon mill. The Grays Harbor Paper Co. mill in Hoquiam, Washington plans to begin purchasing Halsey pulp during the fourth quarter of 1993, with tonnage expected to reach an annual rate of 100,000 tons or more by early 1994, when a second paper machine is operating. Together with White Gold pulp being sold to newsprint mills in the Northwest, the Grays Harbor tonnage will mean full capacity operations for Halsey, despite weak pulp markets worldwide.
 A group of investors recently purchased the Grays Harbor mill from previous joint owners ITT Rayonier Inc. and International Paper. The mill, which has capacity for 135,000 tons per year of printing/writing papers, previously purchased pulp from an adjacent pulp mill which is being demolished.
 Both Pope & Talbot and Grays Harbor will benefit from the arrangement. Grays Harbor gains an assured, nearby source of quality bleached pulp from a mill designed to produce the combination of softwood, hardwood and sawdust pulps required in printing and writing grades of paper. The pulp will be sold to Grays Harbor based on a formula tied into final white paper prices, which will help protect operating margins for Grays Harbor during times of unusually high pulp prices.
 Pope & Talbot also will benefit in several ways. The Grays Harbor tonnage will mean capacity operations at the Halsey mill during weak international pulp markets. At least fifty percent of the Grays Harbor pulp will be made from hardwood chips and softwood sawdust, which are less expensive and more readily available in the Pacific Northwest than are softwood chips. Environmental pressures have severely curtailed the availability of softwood logs in the region; lower lumber and plywood production means fewer and more expensive chips for the area's pulp mills.
 Sale of pulp to Grays Harbor based on white paper prices effectively diversifies Pope & Talbot's exposure in commodity markets. Now, about one half of the company's pulp price exposure will fluctuate based on white paper prices rather than the more volatile market pulp. And, there are significant transportation cost savings in serving one customer only a few hundred miles away from Halsey, compared with competing in worldwide pulp markets.
 Finally, the Grays Harbor contract will give Pope & Talbot valuable experience in producing white printing and writing paper pulps, which could be important in future marketing plans for Halsey. These opportunities in high-quality bleached pulp are possible because of capital expenditures this year, which are resulting in the installation of an oxygen delignification process, a new bleaching system and a new pulp-drying system at the mill.
 Peter T. Pope, chairman, president and chief executive officer of Pope & Talbot, stated, "We are pleased with this contractual arrangement to supply pulp to Grays Harbor." He continued, "The contract should mean full capacity operations at Halsey beginning early in 1994, despite weak pulp markets." Pope concluded, "This will be positive both for Pope & Talbot earnings next year and for company employees at Halsey, where work weeks are being curtailed during this period of market weakness."
 Pope & Talbot, Inc. is a publicly held, Portland-based paper, pulp and wood products company traded on the NYSE. Pope & Talbot was founded in 1849 and has operations throughout the United States and in Canada.
 -0- 9/1/93
 /CONTACT: C. Lamadrid of Pope & Talbot, 503-228-9161/

CO: Pope & Talbot, Inc. ST: Oregon IN: PAP SU:

RB-JH -- SE009 -- 7987 09/01/93 13:15 EDT
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Publication:PR Newswire
Date:Sep 1, 1993

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