AbitibiBowater Plans to Invest in its Iroquois Falls Paper Mill

MONTREAL—August 24, 2011—AbitibiBowater announced a reconfiguration and capital spending program for its paper mill located in Iroquois Falls, Ontario. The investments will improve overall product quality and the mill’s competitive position.

The company will be investing between C$12-$17 million in the thermo-mechanical pulp mill and on paper machine number eight, the larger of the mill’s two machines. The pulp mill investment will result in improved pulp quality with the installation of additional pulp cleaning. Paper machine upgrades will result in improved wet-end formation and newsprint quality. As well, chip receiving and chip handling capabilities will be increased to allow the Iroquois Falls facility to operate on 100 percent externally supplied chips, with the mill’s current woodyard and woodroom being phased out.

“Today’s announcement is a critical step in improving the competitive position of our Iroquois Falls operation for the foreseeable future,” said Michel Maillé, vice president, Pulp and Paper Operations. “While it has been a good site over the years, this investment is necessary to meet today’s market and economic realities.”

The reconfiguration follows consultation with both the Town of Iroquois Falls and the employees at the mill and their union representatives.

The increase in chip receiving and handling capability and the closure of the woodroom and wood yard will occur during the first half of 2012. The reconfiguration will result in a workforce reduction of approximately 60 positions, although the Company hopes the mill demographics will significantly reduce the number of employees who will be laid off given retirement eligibility over the next couple of years. The pulp mill and paper machine investments will be made over the next 12 to 18 months.

“In addition to improving mill economics, the conversion to 100% externally supplied chips will also provide an outlet for chip residuals from sawmills on the Highway 11 corridor. This will be particularly important as markets for Ontario lumber recover,” added Maillé.