One of New Zealand’s largest paper mills plans to halt processing starting next year, with the Oji Fibre Solutions-controlled Kinleith Mill focusing on pulp instead of its loss-making paper production.
Announcing the move today, Oji CEO Jon Ryder said it was part of a simplification process with the business transitioning to a “paper import model” as it grapples with skyrocketing power prices—up more than 600% over the past two years, the cost of logs and aging equipment at the plant.
“Therefore, we are consulting on a plan to permanently shut the Kinleith PM6 paper machine and move to a paper import model for our packaging operations,” Mr Ryder said.
“Manufacturing paper has become unprofitable. Paper production at the Kinleith Mill has suffered significant losses for several years, and we see no prospect of the situation improving.”
Oji CEO Jon Ryder on the challenges around operating a paper mill in New Zealand.
“Due to the complexities of operational changes required at the mill for this proposal, the exact number of job losses is unknown at this stage,” Mr Ryder said. “We anticipate that approximately 230 roles will be affected.”
The latest move comes after Wood Central revealed in August that New Zealand’s energy prices are now among the highest in the Western World. This led Christopher Luxon, the country’s prime minister, to warn that the country is facing “an energy security crisis.”
At the time, Oji—one of six Japanese conglomerates heavily invested in the New Zealand forest products industry—pressed the Luxon Cabinet to provide instant relief over “terminal” rises in electricity prices.
Oji is now expected to make an announcement about the mill’s future in January.
Speaking to RNZ today, the E tu union is now calling on Oji to pause the consultation process until the new year so it can bring in experts and put together a proposal to keep the paper-making production in New Zealand.
Joe Gallagher, a union negotiator who met with Oji executives earlier today, told Nine to Noon that the union wanted to engage with local authorities and the government to explore accessing regional funding.
“Essentially, the mill is the heart of the south Waikato; Tokoroa was born out of the mill being built, so this would be a massive blow for this economy if we can’t keep this production going,” Mr Gallagher said, adding that the move would also impact countless contractors.
According to Ian Farall, worker and union delegate, it has been an emotional morning: “Obviously there were a lot of angry people today upset about what the company’s proposal was, really hoping and wishing (management) could have done better,” he told the Midday Report.
“We know it’s been declining in the ability to produce compared to what it was in 2010; we’re down 80,000 tonnes a year,” Mr Farall said, adding that it has been a difficult time for the manufacturing industry.
“What’s happened to Winstone Pulp, as well as to Penrose Mill…They closed them down, and the government didn’t want to help or assist with that whole process. It seems the dole queue is going to increase.”
Ian Farall, worker and union delegate speaking about the lack of assistance provided by the New Zealand government.
- To learn more about the challenges faced by the New Zealand paper and pulp industry, and the impact of power prices on the economics of New Zealand’s manufacturing industry, click here for Wood Central’s special feature.
