Catalyst to Temporary Shut Down Port Alberni Groundwood Facility

Port Alberni, British Columbia, Canada, 21 August 2006 – With a continuing focus on competitive markets and performance management, Catalyst today announced the indefinite closure of the groundwood pulp facility at its Port Alberni mill. The move takes effect 30 September 2006.

Groundwood pulp produced onsite will be replaced with deinked pulp supplied by the company's Paper Recycling Division in Coquitlam. This step will reduce fiber costs and help balance fiber requirements across divisions as the Port Alberni mill drives for alternatives to address uncompetitive costs unique to its operation.

"Efficiency and quality programs have driven the cost of deinked pulp down to the point where it is now part of an interim solution for our highest cost production at Port Alberni," said Ron Buchhorn, senior vice president, operations. "We know an indefinite shut-down is tough on the 60 employees and families affected by layoffs and we continue to work with our unions on options that can make production at the mill viable for the long haul."

The company has also called repeatedly on the City of Port Alberni to follow Powell River's lead with sustained tax adjustments to bring the mill's property taxes in line with what competitors pay. The mill's property tax costs are nearly four times higher than the North American average of $6 per metric ton of production.

"Employees are still finding ways to streamline operations, drive out costs and work smart, all of which contributes to the CAD 300 million in performance improvements achieved in the past three years. Even so, the factors that led to the permanent closure of our No. 3 paper machine earlier this year are still there. It will take broad stakeholder support if we are to continue to outpace competitors in meeting future customer requirements for the paper grades made at Port Alberni," Buchhorn said.

Catalyst is a leading producer of mechanical printing papers in North America. The company also produces market kraft pulp and owns Western Canada's largest paper recycling facility. With five mills employing 3800 people at sites within a 160-kilometer radius on the south coast of British Columbia, Catalyst has a combined annual capacity of 2.4 million metric tons of product. Catalyst Paper Corporation common shares trade on the Toronto Stock Exchange under the symbol CTL. The company is headquartered in Vancouver, British Columbia.