Temiscaming, Quebec, Canada, 05 July 2010 – Tembec today provided an update regarding a fire at the company’s high-yield pulp mill in Chetwynd, British Columbia. The fire started on 30 June in the late afternoon. Emergency procedures were followed and no employees were injuried. In addition to the Chetwynd Volunteer Fire Brigade and employees, the Fort St. John and Dawson Creek fire departments and British Columbia Ministry of Forests provided fire-fighting support. The company acknowledges the timely and diligent response of these organizations with gratitude.

The fire and related damage is primarily concentrated in the log storage and chip pile area of the mill site. There was also some damage to the scales, chip receiving and unloading equipment, chip conveyors, and related electrical services. Assessments by mill personnel and outside resources have indicated that damage to the pulp production area of the mill is relatively minor. In terms of direct loss, it is estimated that roughly 40,000 cubic meters of fiber (chips and logs) were destroyed. Although the chip and log piles continue to smolder, the situation is considered well under control.

Site personnel and outside resources are already beginning their work at the mill to address electrical and mechanical repairs, with procurement and delivery of necessary materials and equipment already well underway. Current estimates are that the mill will be out of service for 14-18 days from the date of the fire, resulting in lost production of approximately 10,000 metric tons. The company indicated that there will be no disruption of supply to contract business, given that it has two other high-yield pulp mills from which to supply the needs of its customers.

Tembec maintains property and business interruption insurance on all of its facilities; the deductible to be absorbed by the company on large claims is CAD 5 million. This event likely will exceed this deductible limit.

Tembec is a large, diversified and integrated forest products company and a global leader in sustainable forest management practices. The company’s principal operations are located in Canada and France. Tembec’s common shares are listed on the Toronto Stock Exchange under the symbol TMB and warrants under TMB.WT. Additional information on Tembec is available at www.tembec.com.