Mills buckle under energy costs
A central North Island paper mill has criticised high power prices.
Eighty-year-old Whakata¯ne Mill confirmed on Tuesday it would close after losing its key customer and failing to find a buyer, resulting in 210 job losses.
In nearby Kawerau, Norske Skog’s Tasman pulp and paper plant is also under strategic review, and sources say a buyer may be in the wings.
The company confirmed selling was one option it was considering and a number of parties were doing due diligence.
Closed borders had made viewing the mill difficult.
‘‘Overseas interest in something like this is understandably high due to the nature of the assets. Covid-19 restrictions have certainly affected interested international parties who would want to see things first hand.’’
While declining newsprint demand is one of Tasman’s biggest issues, the mill has joined others in the industry in speaking out about high energy costs.
Whakata¯ne Mill’s general manager, Juha Verajankorva, has been highly critical of New Zealand power prices, saying they are ‘‘a definite handicap’’ compared with other countries.
Major Electricity Users Group chairman John Harbord said he expected other mills to follow Whakata¯ne. ‘‘High electricity prices are not the sole reason but they were certainly a contributing factor and they will be a significant contributing factor in additional closures that I think are almost inevitable.’’
MEUG blamed the prices on a lack of competition among the energy generators and said they were ‘‘unsustainable’’ but likely to remain for at least six months.
In 2018, spot electricity prices were $80 a megawatt hour but at the moment, the spot price was averaging $130 MW/h, peaking at times to $320 MW/h.
Forestry and Economic Development Minister Stuart Nash declined an interview with Stuff last month but said in a statement he believed there was ‘‘definitely a future for greater use of wood products and natural fibre products in our packaging industries’’.