The owners of a Kawerau newsprint mill say it is too soon to speculate on whether a review of the business will lead to job losses.
Norske Skog says it is exploring "all options" for the future of its Tasman mill, which employs 160 people and has been operating in the small Bay of Plenty town for 65 years.
The Norwegian company's announcement has raised urgent questions in Kawerau, population 7150, including from the town's mayor who said changes could have a "huge" on the eastern Bay of Plenty, but it did "no good to panic just yet".
In a statement issued by Norske's head office in Oslo at the weekend, the company said it had announced to employees and stakeholders it was starting a process to identify alternative production options for its Tasman newsprint mill in Kawerau.
It said this was a result of the rapid, negative and likely irreversible impact Covid-19 had on the industry in the region.
The company was looking at several long-term options including making "bleached chemical thermo mechanical pulp".
"Once a preferred option is identified, a proposal will be put forward for consultation with employees at the mill."
A company spokesman told NZME it aimed to reach a conclusion early next year.
It was "premature" to be talking about job losses or redundancies until all options for the mill were explored, he said.
"We shouldn't speculate at this stage."
KPMG, an accounting agency, had been engaged to help ensure a "rigorous process to evaluate alternatives".
"The impact of Covid-19 on the demand for Norske Skog's products has been dramatic. The Australasian market for publication grades has declined by 25 per cent compared to 2019."
Kawerau mayor Malcolm Campbell said he had not been made aware of Norske Skog's plans but the council would back the company all the way.
The mill was one of the town's largest ratepayers, but Campbell said it did "no good to panic just yet".
If a significant change was to be made at the mill, he believed job losses would be "more than likely on the cards". He said the impact of that would be "huge" and widely felt throughout the eastern Bay of Plenty.
He believed, however, the business was simply changing tack in an ever-changing environment and things were not "as dire as they seem".
The mill had been "winding down" for more than 30 years as demand for newsprint slowed, he said.
"When people start talking like this it always goes to down the path that it would be the death of our town, which isn't true."
Campbell said many Norske Skog mill workers were from the Whakatāne area and Kawerau had mainly orchard and forest workers living in the town.
"We [the council] have always been a big supporter of the mills in our town and we will continue to do so."
The Pulp and Paper Union represents about 100 workers at the mill.
Union secretary Tane Phillips said things were "up in the air" at the moment.
He said they knew the mill had been looking at their business closely and conducting case studies but Norske's next steps were not clear.
Nothing had been put to them yet but they would be making inquiries with the company, he said.
The union had been representing workers at the mill since the late 1960s.
When asked why community leaders had not been briefed yet, the Norske Skog spokesman said the company would inform external stakeholders in detail once there was a preferred option.
"Most people are well aware of the impact that Covid-19 has had on the newsprint industry and a review of options is therefore not surprising."
He said the company had supplied domestic customers with publication paper for decades and would continue to honour its contractual obligations into the future.
The Tasman mill has an annual production capacity of 150,000.
Norske Skog owns four mills in Europe and two in Australasia, as well as a pellets factory. It has about 2300 employees in five countries and is listed on the Oslo Stock Exchange.