Norske Skog facing up to $1 billion in claims over landfill site linked to Kawerau mill

The Norske Skog Tasman pulp and paper mill in Kawerau just before it closed down. Photo / Andrew Warner

Paper miller Norske Skog is further winding down its New Zealand operations after facing up to $1 billion in claims over a landfill long used by its now-shuttered Kawerau mill.

Directors of Norske Skog Tasman, which had closed its Tasman mill in 2021 citing decreased demand for paper, sold the bulk of its property assets last year to Japanese firm Oji Fibre Solutions for $10.9 million.

Norske Skog announced at the time the deal with Oji was settled it retained some rump property assets - “some rural land areas, and some other land areas previously used for industrial landfilling and water treatment facilities” - pending “ongoing processes to complete the required closure steps before a sale process will be executed also for these areas”.

That sale never took place, and instead David Roscoe and Adele Hicks of Grant Thornton were appointed by Norske Skog as liquidators on March 7. Their first report states disputes over the toxic landfill site - with claims against the company potentially totalling more than $1b - led to the pin being pulled.

“During the life of the company, several parties have made claims that the obligations due by the company under the historical landfill lease were not complied with. These disputes have resulted in claims being brought against the company, and the director has taken legal advice and has recognised the existence of contingent liabilities of the company in its financial statements,” Roscoe and Hicks said.

Make it your business to know

Start your day with the latest business headlines straight to your inbox.

Please email me competitions, offers and other updates. You can stop these at any time.

Email address

Sign Up

By signing up for this newsletter, you agree to NZME’s Terms of Use and Privacy Policy.

“The quantum and risk of these liabilities has become so material that the director has concluded that the company is no longer solvent and should be liquidated.”

Read More

• The last days of the Norske Skog Tasman Mill...
• Foreign company sells Tasman paper mill in $11m deal ...
• Kawerau's Norske Skog Tasman mill: Community in shock ...

Liquidators said six claims regarding the landfill are currently active - some already filed in courts - with arbitration having failed to reach settlement.

“Current estimates by the creditors put the claims in the range of $115-1,040m,” the report said.

Liquidators note Norske Skog Tasman had quantified these claims by recording a contingent liability of $6.2m.

The scene is now set for a tussle over $10.3m held in trust by Buddle Finlay - apparently the proceeds of the Oji sale - awaiting distribution by order of an arbitration tribunal.

“At this stage, we expect there will be funds available to make payment to unsecured creditors,” liquidators said.

Total assets - including the funds held in trust - are said to be $14.5m, with negligible creditors outside the landfill claimants who are classed as unsecured.

There is also the plot of land central to the landfill dispute with a book value of $1.3m, but which has been impaired to zero due to the cost of returning it to saleable condition exceeding its value.

The Tasman mill had been a centrepiece of Kawerau, with the township effectively growing around since it opened in 1952. The 2021 closure led to the loss of 160 jobs.

Liquidator David Ruscoe did not return repeated calls this week.

A request for comment sent to Oslo-based Norske Skog, a Norwegian paper-milling behemoth, also went unanswered this week.

Matt Nippert is an Auckland-based investigations reporter covering white-collar and transnational crimes and the intersection of politics and business. He has won more than a dozen awards for his journalism - including twice being named Reporter of the Year - and joined the Herald in 2014 after having spent the decade prior reporting from business newspapers and national magazines.