Paper mill plans to halve its output

Norske Skog Tasman says declining demand for newsprint means it will halve its capacity. Photo / Stuart Munro

Norske Skog Tasman, which owns and operates the Tasman mill at Kawerau, said it is planning to halve its capacity to 150,000 tonnes a year in the face of declining global and regional demand for newsprint.

Management are consulting with about 290 employees concerning the need to reduce capacity, general manager Peter McCarty said in a statement.

Norske Skog Tasman is a wholly-owned subsidiary of Norske Skogindustrier ASA, a Norwegian pulp and paper company based in Oslo. The corporation is the world's largest producer of newsprint magazine paper. The Tasman mill is New Zealand's only manufacturer of newsprint.

McCarty said employees were well aware of the challenges facing the industry due to general economic conditions and increased competition from electronic media.

"This is a proposal to be consulted on and no decision has yet been made," McCarty said in an email to APNZ.

McCarty said the Tasman Mill had successfully increased exports to Asia over the last three years in an effort to offset the decline in demand in New Zealand and Australia.

However demand in these new markets was weakening and prices falling due to fierce competition between newsprint suppliers.

"We have worked very hard to reduce costs to allow us to compete in the Asian market, however low newsprint prices, unfavourable exchange rates and oversupply to the Asian region has made this market unprofitable for us," he said.

The Tasman mill is now exporting more than two thirds of its production to Asia.

"We cannot profitably sustain this level of exports and it is now time to take action to address this overcapacity in the long term interests of the Tasman site," he said.

McCarty said the Tasman site would remain an important employer in the region. He said the mill would continue to produce newsprint for the New Zealand, Australian and Pacific Island markets and was actively pursuing a range of renewable energy opportunities.