Catalyst Approves CAD 12 Million Capital Project at Port Alberni Mill

Vancouver, British Columbia, Canada, 13 February 2008 -– Catalyst Paper (TSX:CTL) announced a CAD 12 million capital upgrade and the restart, by mid-year, of the No. 4 paper machine at its Port Alberni mill.

The investment in the mill’s thermo-mechanical pulp facility and restart of the machine was approved by the company’s board of directors today. The board also approved a CAD 14 million early retirement and severance package associated with a new labor agreement.

This step follows months of discussions with community and local union leaders on actions required to improve the mill’s business climate and cost competitiveness.

“The two union locals -– CEP 592 and 686 -– are to be commended for reaching a landmark agreement that puts in place modern work practices and brings labor costs to competitive industry levels,” said Richard Garneau, president and chief executive officer of Catalyst Paper. “Knowing we have the support of our employees means we can move forward with the thermomechanical capacity increase project and return to a two-machine mill, with a significantly improved cost structure.”

Catalyst indefinitely curtailed PM4 -- its highest cost machine -- on 01 September 2007. This followed repeated appeals to major stakeholders to change business conditions, including bringing the mill’s property taxes in line with competitive jurisdictions. As the city’s largest taxpayer, the Catalyst paper mill paid CAD 7.1 million in 2007, approximately three times the Canadian average and more than twice the British Columbia average in property tax per metric ton.

Port Alberni’s city council has approved a gradual reduction of major industry property taxes over five years.

“We acknowledge this is a first step, but we remind civic leaders that to be competitive today, our annual municipal tax bill in Port Alberni should be CAD 2 million less than it is now,” Garneau said. “We are looking to senior levels of government to also act on this critical tax issue to help municipalities improve the hosting conditions to attract industries.”

Catalyst, headquartered in Richmond, British Columbia, 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 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’s common shares trade on the Toronto Stock Exchange under the symbol CTL.