Rotorua's controversial Lumbercube mill on the eastern suburbs of Rotorua has been closed down.

The mill, on the former Tachikawa mill site on Vaughan Rd was closed by its owners - the Pedersen Group - this morning.

Pedersen Group chief executive Gavin Hudson said the decision to cease the mill's operations had not been taken lightly.

It is not known at this stage how many jobs have been lost.

Machinery has gone quiet at Lumbercube mill this morning. Photo/Stephen Parker
Machinery has gone quiet at Lumbercube mill this morning. Photo/Stephen Parker

In a statement sent to the Rotorua Daily Post Mr Hudson said the mill would be closed today as part of a managed wind down due to challenges in becoming commercially operational.

Lumbercube was established in 2014 with the intention of maximising the value-add component of the traditional commodity-based export log market and to bring further efficiencies to New Zealand's fibre supply chain.

Mr Hudson said despite the positive impact of the project and significant long-term potential, it became clear that a number of commercial and operating factors the business has been addressing to ensure continued successful operation could not be resolved in a timely manner.

"Today's decision is made with immediate effect to cease mill operations and to commence a managed wind down plan at the site. Consultation has now begun with Lumbercube's Rotorua-based workforce."

He said the Lumbercube decision did not affect the broader operations of Pedersen Group, which continued to operate a successful and diversified contracting and services business across New Zealand and Australia.

"The Lumbercube team have made an incredible effort to make this unique mill work but unfortunately were unable to do so in a timely manner, despite looking at every option."

"We are now focused on doing everything we can to support our staff over the coming weeks and to honour all obligations to our suppliers and customers," said Mr Hudson.

He said since commencing in 2014 Lumbercube has provided an innovative response to the needs of customers, foresters and the pulp and paper industry by delivering a square log product in high demand by end-users looking to maximise freight and milling efficiencies; and which removes waste by creating value from every part of a traditional log.

"Lumbercube has brought significant efficiencies to the traditional the New Zealand fibre supply chain with the value-add it desperately needs by further processing logs into three component parts - square logs for export, high quality chip for the pulp and paper industry, and bark and sawdust for use in green energy solutions. Importantly it has also delivered environmental benefits by removing the need for fumigation treatment of export logs."

The mill has been the subject of thousands of noise complaints since it opened in September last year.

More to come.