Two New Zealand pulp mills are facing closure due to wholesale energy costs. The announcements follow the decision of another pulp and paper manufacturer, WPI, to cease production at its Kariori mill for two weeks because the huge increase in energy prices has made it economically unsustainable to continue production. Source: Timberbiz
NZ news site Scoop says workers in many other manufacturing companies are facing vulnerable employment due to high energy costs.
The central North Island Ruapehu District Council says the Winstone Pulp Mill near Ohakune, the largest employer in the Ruapehu District, may close amidst soaring electricity costs.
The mill’s potential closure due to the high cost of electricity has sent shockwaves through the community and could have severe local and national repercussions.
And Scoop reports 75 workers at OJI Fibre Solution’s Penrose Pulp Mill in Auckland learnt this week that their mill is likely to close by mid-December for the same reason.
They were provided information at a meeting of all staff called by the company on Wednesday morning. Scoop says union representatives are calling on the Government to urgently step in and save the mill by reducing wholesale energy costs in any way possible.
“This has come like a bolt out of the blue for workers and was completely unexpected,” said Justin Wallace, organiser for FIRST Union which represents production workers on site, told Scoop.
Joe Gallagher, E tū industry organiser, told Scoop that workers have been repeatedly told by the company over the years that the Penrose mill, which turns recycled paper and card into pulp, was the most efficient site OJI had in the country.
“They are gutted that the company has now told them that, pending consultation, the site will close,” said Mr Gallagher. “We understand wholesale energy costs are way too high but this can’t be the end of the story for Penrose, and there has to be a way to save these jobs and the recycling capacity of the mill.”
Ruapehu Mayor Weston Kirton said that the Winstone Pulp Mill was crucial to the central North Island economy and New Zealand’s overall economic health.
“The high cost of electricity, which has surged by 600% over the past couple of years, is jeopardizing its operations. In September 2021, a Megawatt hour cost $100; it now stands at $700. Despite significant investments in new equipment and a 30% reduction in electricity use to boost productivity, Winstone is ‘up against the wall.'”
The potential closure of the mill would be a devastating blow, not only to the local and regional economy but also to New Zealand’s already limited value-added manufacturing base.
“In a country where most of our electricity is produced from renewable resources, mainly rain, this situation is unacceptable and highlights systemic and policy failures,” Mr Kirton said.
Mr Kirton expressed his approval of Finance Minister Nicola Willis’s actions in seeking urgent advice from Treasury on possible interventions for spiking electricity costs.
He also supports Regional Development Minister Shane Jones’s call for a substantive inquiry into electricity pricing to push down prices.
“As Minister Jones pointed out, New Zealand has recently experienced the highest electricity costs in the western world, and we cannot allow our businesses to be destroyed by this,” he said.
Mr Kirton wants the NZ Government to act with urgency to ensure the Winstone Mill remains operational.
“The importance of the Winstone Pulp Mill to the central North Island economy is comparable to the Tiwai Aluminium smelter’s significance to Southland, which also faced closure due to long-term energy costs,” he said.
“With the government focused on growth and employment, a major export-earning employer should not be allowed to fail due to internal policy settings.”
