Proposed Ngawha wood mill mothballed by government

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Plans to build a new wood processing facility at Ngawha in Northland have been put on ice by Northland Inc, New Zealand Trade and Enterprise and the Ministry for Primary Industries.

It follows the publication of a study into the potential project by independent consultants Indufor, which looked at the local impact, resource availability and market demand for an integrated sawmill and mechanical pulp mill at Ngawha.

Dr David Wilson, CEO of Northland Inc, argued the decision not to proceed is the right one.

"While the study does identify potential, we have decided not to continue with further investigations at this stage. This is in part due to uncertainties arising from the Electricity Authority's Transmission Pricing Methodology review and because of concerns raised by industry that need to be addressed," he said.

The Electricity Authority's review is considering the allocation of transmission costs and in May this year proposed raising the cost of bills in Auckland and Northland, to reflect the benefits of recent grid updates.

Indufor's report argued a mill would benefit the region through the provision of new jobs, and subsequent economic benefits, would not compete with existing wood processors and reduce heavy log traffic through the region. It also said there was sufficient resource in the area to develop the industry.

The report did note that some entities argued the project should be broadened to include other aspects such as the supply chain, integration of resources and collectivisation concepts.

The authors note, "the sentiments indicate that any tangible development of a new wood processing facility (whatever the mill concept) should be considered in the context of the aspirations and desires of Northland's forest resource owners."