Bay mill crucial to business, says Pan Pac

Pan Pac says it is committed to growing its Hawke's Bay operation as it expands its Otago footprint.

Pan Pac Forest Products' $23 million investment in its Otago sawmilling operation does not mean the Hawke's Bay mill will become a bridesmaid.

"The shareholder is very keen to invest in Hawke's Bay - it is a twin strategy, not one or the other," general manager for lumber Michael Reaburn said.

The Japanese-owned Whirinaki-based company bought the Otago sawmill and a timber-drying facility in 2014, buying the sawmilling and drying assets at Milburn and Milton from the receiver of Southern Cross Forest Products.

Pan Pac plans to double Milburn's annual output to 100,000cu m of radiata pine sourced from Otago and Southland, after which the Milton plant will be closed.

Pan Pac employs 29 people across both sites, planned to increase to 35 when Milburn is fully developed.

Otago administration and sales functions will remain in Hawke's Bay for the medium term, Reaburn said.

It is Pan Pac's first operation outside Hawke's Bay, where it has operated for more than 40 years with wood pulp and timber.

Pan Pac is owned by Oji Green Resources, a subsidiary of Oji Group Holdings. It was established 43 years ago with a sawmill and pulp mill at Whirinaki, north of Napier, and owns 35,000ha of forests.

Its turnover is more than $350 million, supplying forest products to New Zealand and world markets including China, Japan and the United States.

In Hawke's Bay it employs 370 staff and 450 contractors.

In 2014 a subsidiary of Oji Holdings was given Overseas Investment Office approval to buy Carter Holt Harvey's pulp, paper and packaging businesses from billionaire Graeme Hart in a billion-dollar deal, giving it ownership of the Kinleith pulp and paper mill and the Tasman pulp mill in the central North Island.

Last year it purchased a $3.12 million Tangoio farm to expand its Hawke's Bay forestry footprint.