Home Depot to Carry Fiberboard from Kafus

BOSTON & TORONTO - January 19, 2000 - Kafus Industries Ltd. (AMEX: KS) and its 86.5% owned subsidiary, The CanFibre Group Ltd. (CDN: CFGL), are pleased to announce that CanFibre has reached agreement with Home Depot (NYSE: HD) to supply North America's leading Do-it-Yourself retailer with CanFibre's unique AllGreen® medium density fiberboard (MDF).

AllGreen® MDF is North America's first medium density fiberboard to wear the Green Cross Logo from Scientific Certification Systems for its 100% recycled wood fiber content and its zero incremental formaldehyde emissions. AllGreen® MDF also carries the SmartWood emblem qualifying it as a neutral core for manufacturers seeking Forest Stewardship Council certification.

"The conclusion of the sales arrangement with Home Depot confirms their ongoing commitment to support sustainable building products," said David Saltman, Vice President of Marketing and New Product Development. "Not only is Home Depot recognizing the unique environmental characteristics of CanFibre's AllGreen® MDF, but additionally, by recycling store wood waste through our Riverside AllGreen® facility, they're helping to close the sustainability loop," continued Mr. Saltman.

Home Depot has agreed to carry AllGreen® MDF in its nine state North West Region, a minimum of 64 stores. In addition to selling 4x8 panels in its lumber department, Home Depot intends to work with its existing vendors to include AllGreen® MDF as a substrate for other products, such as shelving, kitchen cabinetry and counter tops.

CanFibre's manufacturing facility, located in Riverside, California, is the first panelboard plant in North America to make MDF from 100% recovered urban wood waste. CanFibre Riverside will divert over 150,000 tons of material from landfills and save the equivalent of 3,000 acres of trees from being cut.

CanFibre's AllGreen® MDF represents a major revolution in the panelboard industry. For the first time ever the industry will be able to acquire MDF having the market advantage of being green combined with the premium characteristics of moisture resistance and no incremental formaldehyde emissions. CanFibre AllGreen® MDF will also be produced as a specialty board offering superior moisture resistance and fire retardation at an affordable price.

The CanFibre Riverside factory will operate under strict regional regulations and has incorporated state-of-the-art environmental control technologies. It will recycle all of the water used in the fiber cleaning process, and steam exiting the plant is cleaner than the surrounding air in Riverside. As a result, the CanFibre factory will be the first MDF operation in North America to be registered compliant with ISO 14000 international environmental standards.

Chris Carl, President of CanFibre, stated, "Our green really is clean. The industry perception is that you can't make a premium panel from recovered wood. Our extensive chipping, washing and refining system together with a proprietary press and resin system is capable of yielding boards that surpass all industry standards for strength and stability. Our Riverside mill is located next to our customers, not where the trees are, providing yet another advantage in the market."

With a second plant scheduled for completion in mid-2000 near Buffalo, New York, and addition facilities under development in Amsterdam and Chicago, CanFibre is making a major international statement that industry can compliment the environment, help sustain it and still enjoy exponential growth.

The CanFibre Group is a 86.5% subsidiary of Kafus Industries (Kafus) which is rapidly becoming a global leader in the manufacturing of superior materials made from sustainable, alternative resources. Other Kafus activities include the manufacturing of chlorine-free paper without trees through the use of kenaf, an agriculture row crop; the production of natural fiber composites to replace glass reinforced plastics in automobiles and other key industries; the production of siding and flooring materials from fiber and cement and the transformation of animal waste into time-release, organic fertilizer