Money for paper
Japanese giant snaps up Tasman mill after owner found in breach of foreign investment rules,
Aforeign-owned company has sold the iconic Tasman paper mill to a Japanese commercial giant for nearly $11 million after being ordered to offload the assets for breaching foreign investment rules, the Weekend Herald can reveal.
NS Norway Holding AS was granted Overseas Investment Office (OIO) consent to purchase Norwegian company Norske Skog ASA in 2018 after Norske Skog became financially distressed.
It’s understood the multimilliondollar purchase included subsidiary company Norske Skog Tasman Ltd, which owned the Kawerau mill assets and land. The deal was hailed as saving the jobs of 160 workers.
One of the conditions of consent was that NS Norway had to continue running the mill on an ongoing basis or it could be forced to dispose of the land.
However, Norske Skog announced it was closing the mill in June 2021 due to declining global demand for print paper and fallout from the Covid-19 pandemic. It resulted in 160 staff being made redundant.
E tu¯ union said at the time there was a “strong sense of mourning” because the mill had been part of the town’s history for generations and was the reason Kawerau township was built.
“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,” E tu¯ industry spokesman Bruce Habgood said at the time.
Documents obtained by the Weekend Herald under the Official Information Act show the closure triggered an assessment by the OIO about whether any consent conditions had been breached.
Though NS Norway had indicated it intended to find a buyer and that a process to offload the assets was already under way, the OIO decided to formally write to the company requiring it to dispose of the land for a “technical breach” of its consent.
A December 2021 OIO assessment report said the company had freehold interest in more than 350ha of sensitive NZ land as well as leasehold interest in a further 28ha.
The land included the Tasman paper mill, forests, a logyard, conservation areas and publicly accessible land.
Nearly two years on, the mill’s sale process was finally completed this month to Japanese firm Oji Fibre Solutions for $10.9m.
The vendor is listed as Norske Skog Tasman Ltd and PPP Operations (NZ) Ltd is listed as a copurchaser. Financial documents for Norske Skog Tasman show it made a $3.6m profit in 2020 off revenue of $111m. Its cost of sales was $85m and distribution expenses were $14.3m.
That sunk to a loss of $37.6m in 2021 — the year the mill was shut.
Its revenue fell to $69.35m while expenses were $26.5m for that year resulting in a $25.16m operating loss before financing costs. Those costs included a restructuring provision charge of $29.5m to cover redundancy and other closure costs.
Bay of Plenty regional councillor and former Kawerau mayor Malcolm Campbell described the $10.9m price as a “fire sale”, saying, in his opinion, it would likely cost more to pull the plant down. The facility featured industrial factories and commercial office space, Campbell said.
“It’s built like a brick s*** house. It’s been rocking and rolling for the last 70 years.
“It lends itself to all sorts of possibilities.”
Campbell said there had been
It’s built like a brick s*** house. It’s been rocking and rolling for the last 70 years. It lends itself to all sorts of possibilities.
Malcolm Campbell
rumoured plans for an inland port and container terminal on the site, but it was unclear what Oji planned to do with the old mill following the acquisition.
Over the years the mill had been one of the town’s biggest employers and he believed any development of the site would be a huge shot in the arm to the local community.
In a statement, Norske Skog president and CEO Geir Drangsland said the company was pleased to have concluded the sale agreement after a “lengthy process of negotiations and obtaining all required regulatory approvals for the sale”.
A Norske Skog spokesperson declined to comment on the OIO disposal edict.
They said while NS Norway Holding AS was the owner of Norske Skog ASA “at some point in time”, it had since sold all its shares and now had “zero share in Norske Skog”.
Oji Fibre Solutions CEO Jon Ryder said the Tasman mill deal was granted OIO approval last month.
He said the purchase allowed the Japanese company — which made more than $50m profit last year — to retain essential equipment and services for its nearby Tasman pulp mill.
“We have focused on purchasing what we need to operate the pulp mill and secure our future on the site,” Ryder said.
Norske Skog bought the Tasman pulp and paper mill at Kawerau from Fletcher Challenge Paper in 2000 and later on-sold the pulp business to Carter Holt Harvey. In 2003 it employed around 700 people.
The Herald reported at the time that the sale of the paper business was done for $5 billion.