Norske Skog struggles with order

Wednesday 1 Apr 2020

Newsprint-maker Norske Skog grapples with shutdown order - Paper maker Norske Skog wants to keep its Tasman mill at Kawerau operating for another week while it still has fibre supplies rather than go through a costly plant closure.

The operation was declared essential by the government last week but cleared to operate for only nine days to provide sufficient newsprint to keep the country’s newspapers supplied during the four-week lockdown. It is scheduled to stop operating midnight, April 4.

The Oslo-headquartered company said if it does have to cease production at Kawerau, it wants to be able to slow production to a “crawl” rather than completely turn off the one remaining paper machine at the site.

After April 12 “we would run out of fibre unless additional fibre becomes available."

"As we source 80 percent of our fibre from sawmills it would be very hard to continue to operate unless sawmills were operating,” a spokesman said by email.

Norske Skog typically makes 800 tonnes of newsprint a week for the local market, about half of which goes to the major media groups. Another 100 tonnes go to regional and community papers and the balance is bought by commercial printers.

Daily newspapers have been deemed essential industries during the national lockdown, but the government has said magazines and community newspapers are not essential. It relented a little today by allowing community newspapers in difficult-to-reach communities to apply to be allowed to reopen, as long as they can meet strict covid-19 health and safety requirements.

The mill usually employs up to 170 staff and contractors, but on-site staff is being kept to a minimum, the company said.

The company has already laid off workers at some of its European mills as demand drops and recycled paper collection becomes more difficult.

The government ordered a halt to harvesting and timber processing last week as part of its efforts to keep workers at home and slow the spread of covid-19. Oji Fibre Solutions was cleared to keep its Kinleith pulp mill operating in order to supply the packaging it and others make for the food sector, but its mills at Penrose and Kawerau were shut.

Other combined sawmills and pulp makers, including Pan Pacific Forest Products and WPI International were also shut. All other sawmills were also shut.

Officials were due to review the restrictions after seven days but industry executives are concerned the government doesn’t understand the how the sector’s timber and pulp and paper operations mesh together, nor the lead times involved in establishing new safe working protocols for forestry crews and at the various processing sites when fresh timber and board supplies start to be needed.

Norske Skog's Nature’s Flame wood pellet plant at Taupo has been deemed essential for domestic, industrial and public heating but there is no certainty about on-going raw material supply as all the local sawmills that it supply it are shut.

It bought the former Solid Energy pellet business in 2015 as part of strategy to shift out of commodity paper grades and into higher value fibre products, bio- energy and bio-chemical products.

Norske Skog, itself rescued from insolvency in 2018, last month sold its Tasmanian forestry interests for A$62.5 million to provide capital for investment in those new products.

In October it agreed to sell its Albury mill in New South Wales to packaging giant Visy for A$85 million in order to reduce newsprint over-capacity in Australia and reduce its reliance on export paper sales.

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