Norske Skog will close its Tasman mill in New Zealand and a sales process for the mill’s assets. Production will cease by 30 June 2021, permanently reducing Norske Skog’s newsprint capacity by approximately 150,000 tonnes. The mill was opened in 1955. Source: Timberbiz
Since the initiation of the strategic review process in New Zealand in October 2020, a process which Noske Skog said was made necessary by the decline of the publication paper industry and the impact of COVID-19, the has explored alternatives for the Tasman mill.
The Tasman mill has only produced very limited volumes during 2021. Norske Skog says it will honour all redundancy and contractual obligations to the mill’s approximately 160 employees as the workforce is progressively reduced during the third quarter.
According to Norske Skog the decision to close the Tasman mill follows a detailed review over the past eight months. It says the closure will address the substantial imbalance between newsprint production capacity and customer demand in the Australasian region.
The Tasman mill has been an important contributor to the regional economy in New Zealand for the past 66 years, producing more than 15 million tonnes of publication paper over its lifetime.
Norske Skog’s second quarter financial accounts are expected to be impacted by recognition of restructuring costs of appoximately NZ$40 million, mainly related to employee redundancy and site closure costs.
In addition, a non-cash loss of approximately NZ$15 million will be recognised in the second quarter, relating to the New Zealand energy contracts that have been recognised at fair value.
The sale process for the mill’s assets is currently being finalised, and announcements will be made when definitive transactions have been agreed.
Mill asset sales are expected to be completed during the second half of 2021, with gross proceeds and working capital release expected to amount to approximately NZ$60 million.
In summary, a net positive cash effect of approximately NZ$20 million is expected once everything is settled.
The Norske Skog Boyer mill will be the last domestic Australasian publication paper producer with a capacity of 150,000 tonnes newsprint and 135,000 tonnes LWC magazine paper. The Boyer mill will continue to serve the Australasian publication paper market under long-term contracts.
Norske Skog will continue to operate the 90,000 tonnes Nature’s Flame woodpellets business in New Zealand. The pellets production will continue unaffected by the closure of the Tasman mill.
On Wednesday afternoon, workers were told the mill would stop production from the end of June, with most taking redundancies from 16 July once a clean-up has been completed at the site.
The closure affects about 160 workers, including more than 30 E tū (union)members who work in maintenance.
Delegate and E tū industry spokesperson Bruce Habgood says while there’s relief from some workers that there is more clarity around what their future holds, the sense of loss is real.
“There’s a strong sense of mourning that the mill is shutting down – it’s been a big part of the town’s history for several generations and is the reason Kawerau township was built in the first place,” he said.
“While the mill now isn’t the huge employer it used to be, there’s many other businesses that have been created to support it – and they may really suffer ‘death by a thousand cuts’ once the mill’s gone.”
Mr Habgood says the closure highlights the importance of workers being unionised, so that they have access to collective agreements that contain redundancy provisions and protections.
“Some of the workers at the mill are of an age and skillset that means they aren’t so employable anymore and might never work again. We also really need businesses to have their own transition plans going forward so that workers have choices and alternatives.”
Outplacement services will be available to workers, but E tū will be looking at how to formally recognise workers’ skills gained on the job so they can take up other employment opportunities.
E tū organiser Raymond Wheeler says E tū will also be discussing reskilling and training opportunities for all mill workers.
We also need to continue to progress the Industry Transformation Plan (ITP) for the forestry and wood processing sector and see what can be done to bring more of the manufacturing supply chain back to Aotearoa New Zealand,” he said.
