Paper Mills, continued

While broadening our spectrum of paper products, quality and service to our customers remained a high priority. Vertis, a large U.S.-based printer, presented us with the coated grade 2004 Paper Supplier of the Year Award. We were the recipient of the Dow Jones Gold Award for the fourth consecutive year, based on the performance of four mills supplying newsprint to that valued customer. For the second consecutive year, PAGE, a well-known buyer for a group of individual newspaper publishers, also recognized us with an award for our service. Bowater’s newsprint performance is judged either first or second in 86% of the pressrooms we serve.

Bowater remains the only supplier worldwide that offers five different grades of market pulp. With 75% of our market pulp volume sold in North America, and a 9.5% market share, our focus is to develop and expand pulps used in making consumer products for tissues, towels, absorbent and hygienic products. Consumer products now account for 60% of our total market pulp sales.

The markets for lumber were strong over the past year with housing starts reaching record levels. In cooperation with the Fort William First Nation, we opened a new sawmill at Thunder Bay. It was rated number one for best all-around quality by the Canadian Lumbermen’s Association. Our sawmills are integrated to support our pulp and paper operations by providing high-quality residual wood chips. The Oakhill sawmill in Nova Scotia has a production level three-and-a-half times the 2000 level, providing 55% of the wood chips to our Mersey paper mill. The 2004 safety performance was a record best at Oakhill.