Oji Fibre says Penrose plant may close due to power prices, costing 75 jobs

Oji may shut its paper recycling plant at Penrose due to high energy prices. Photo / NZME

Oji Fibre Solutions said its Penrose paper recycling plant, which employs 75 people, may have to close due to high energy costs.

The news follows Winstone Pulp International’s decision to pause work for 14 days at its two central North Island operational sites due to high power prices.

Wholesale power prices have been very high due to low lake levels and constrained gas supply.

At Haywards, the price yesterday came to $513.78 per megawatt hour (MWh), up from $194.49 MWh at the start of June.

In a statement, Oji chief executive Jon Ryder said it was well known that the company had suffered large losses recently.

“Our Penrose mill has suffered a three-year pattern of losses, with no prospect of the situation improving.

“These losses are caused by several issues, including dramatically rising energy costs.

“We’ve looked at different options to improve the mill, including technology to save input costs. Unfortunately, these efforts have not been successful to date.”

He said the parent company, Oji Holdings, had a larger, more modern plant in Malaysia that could ensure supply of quality recycled paper for box-making operations in New Zealand and Australia.

Ryder said Oji’s “Fullcircle” wastepaper collections would not be affected, and Oji would remain New Zealand’s largest producer of recycled paper products through its operations at the Kinleith mill near Tokoroa.

But closing Penrose Mill would reduce the company’s capacity to produce recycled paper, and increase cleaned wastepaper sent offshore.

“After considering all our options, we are proposing to close the Penrose Mill,” he said.

Ryder said the company would soon begin a consultation period with the 75 staff at the site.

Union: Urgent help needed

First Union said the 75 workers had been told that the mill is likely to close by mid-December.

Union representatives are calling on the Government to urgently step in and save the mill by reducing wholesale energy costs “in any way possible”.

“This has come like a bolt out of the blue for workers and was completely unexpected,” said Justin Wallace, organiser for First Union, which represents production workers on site.

Joe Gallagher, E tū industry organiser, said workers were repeatedly told by the company over the years that the Penrose mill, which turns recycled paper and card into pulp, was the most efficient site Oji had in the country.

“They are gutted that the company has now told them that, pending consultation, the site will close.

“We understand wholesale energy costs are way too high but this can’t be the end of the story for Penrose, and there has to be a way to save these jobs and the recycling capacity of the mill.”

Workers in many other manufacturing companies are facing vulnerable employment situations due to high energy costs.

“Another crazy outcome of the proposal is that New Zealand recycled paper and cardboard will now be shipped to Malaysia for pulping and then back to New Zealand instead of being processed in Penrose,” Wallace said.

“We will also be raising with the Government the issue of the exorbitant prices that electricity and other energy companies are charging, which has been made worse by the privatisation of energy companies under the Key government.”

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.