Kawerau mill future uncertain

Wednesday 14 Oct 2020

The future of the Tasman newsprint mill in Kawerau is in doubt, with its Norwegian owners seeking alternatives to newsprint production at the site. Late last week Norske Skog announced it has ordered a strategic review of one of the central North Island's largest industrial plants. The company has hired KPMG to find alternative production options and is running a strategic review process for the Tasman mill in Kawerau, consistently one of the nation’s poorest regions.

The review is the latest to put the future of one of New Zealand's most energy-intensive industries on the line. The Tiwai Point aluminium smelter, NZ Steel's Glenbrook mill and the Refining NZ oil refinery are all currently going through similar reviews. James Hardie’s Penrose building products factory is also facing a review.

The impact of covid-19 on demand for newsprint was cited as the primary reason for a review that has been announced just a week before the Oct. 17 general election.

“Norske Skog has announced to employees and stakeholders in New Zealand that, due to the likely irreversible and rapid negative impact that covid-19 has had on the newsprint industry in the region, the group has engaged in a broad process to identify alternative production options to reposition the Tasman newsprint mill at Kawerau industrial site in New Zealand,” the company said in a statement to the Oslo Stock Exchange.

The company was declared an essential service during the level 4 lockdown in March and April, but only cleared to operate for nine days to provide enough newsprint to keep NZ’s newspapers fully stocked through the period. It typically employs 170 staff and contractors, producing 150,000 tonnes a year.

The potential closure comes a week out from a general election where the incumbent Labour Party is in the box seat to be voted back into power. Kawerau falls in the East Coast electorate, where sitting National Party MP Anne Tolley is retiring.

Norske Skog said it’s considering several options for the long-term future of the site and will start consulting with staff when it has a preference. Among possible uses being considered is a bleached chemical thermo-mechanical facility at the site. The mill was already unprofitable heading into the pandemic, reporting a loss of $20.4 million in calendar 2019, including a $31.5 million impairment charge on the value of its factory. Its gross profit dropped 27 percent to $36 million.

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Source: BusinessDesk

Additional reporting from RNZ:

Norwegian forest products company Norske Skog is reviewing the future of its Tasman newsprint mill at Kawerau. The company said Covid-19 has had a rapid, negative and likely irreversible impact on the industry in the region. It said it was now looking at various long-term options including making bleached chemical pulp and once it had a preference it would be put to staff.

The Kawerau mill employed about 160 staff and it had been battling for survival for more than a decade. That had resulted in temporary closures, halving production to 150,000 tonnes a year, and selling assets. Along with other major energy users it has long complained about high energy costs.

Source: RNZ

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