Tembec announces surcharge for its chemical business

TEMISCAMING, Quebec, July 30, 2008 (Press Release) - Tembec today announced a surcharge that will be applied to the resin and lignosulfonate products produced by its Chemical Products Group for their North American customers.

This surcharge is a direct reflection of the significant cost increases being seen in a number of inputs, including freight, chemicals and energy. “This surcharge is directly related to the recent significant increases imposed on our operations by our suppliers, most notably in the areas of energy and purchased chemicals,” said Randy Fournier, Senior Vice President, Chemical Products Group. “There is no responsible alternative but to pass these increases along the supply chain.”

Tembec’s President and Chief Executive Officer, James Lopez, affirmed this most recent surcharge action. “Cost increases of this magnitude cannot be absorbed internally. As with our recent Specialty Dissolving Pulp announcement, we must pass these on to our customers, and eventually to their customers,” said Mr. Lopez.

Tembec has indicated that the size of the surcharge will be determined by product segment and customers based on specific product formulation. The surcharge will be adjusted as energy and chemical prices change.