Whakatane Paper Mill to box on after sale to consortium ensures against closure and the loss of 210 jobs

A fresh start  for  the Whakatane  Paper Mill opens  a  new  era   for  the  forest  products  industry.

The mill,  which its  previous owners  Switzerland-based SIG Combibloc AG said  would be closed  this  month with the  loss of 210  jobs,  has  been sold to a  consortium led  by European investor  Dr  Dermot Smurfit  and including  the  NZ  company Direct Capital headed  by financier Ross George.

At  the time  SIG announced the  closure it said there was no buyer for the mill and no viable option was found.

The mill is Whakatane’s largest private employer and has, for more than 80 years, produced paper and packaging products, mostly for export.

The   new  owners  say they believe  the Whakatāne Mill has a very bright future as the only folding box board mill in Oceania. They say they intend to invest heavily in the mill to support both their customers and NZ’s forest products industry.

The  question   is  whether  other  elements within the industry which also have been under  threat — the Kawerau  paper mill, for  example —   will  take  on a  new  lease  of  life.  The industry generally  has  been   hit  by rising  costs  and changing  consumer  demand.

As it  is, critics  have  argued  that the  forest products  processing  industry  has  become attenuated,  with   vast quantities of  logs  exported  in  raw  form  to  China.

Toi Eastern Bay of  Plenty Development Agency’s Karl Gradon expressed caution, saying while the  sale of the mill is good news there are still clouds on the horizon with the fibre-processing sector.

“China has announced self-sufficiency in logs by 2035, which creates significant risk for the forestry sector.The majority of NZ logs are exported to developing countries in their raw form in anticipation of their domestic logs becoming available in just a few years.

Toi EDA wants the government to work on policy that incentivises investment in added-value processing in NZ, rather than shipping the value creation offshore.

Understandably,  news  of  the purchase of the mill  has reinvigorated the  Eastern Bay of Plenty region.  Whakatāne mayor Judy Turner says it’s a great outcome.

“I’m particularly thrilled for the contractors outside the direct employment of the mill as this has been a very nervous time for them and their staff.”

Turner said   the  mill’s closure and loss of jobs would have been devastating for the local economy.

A spokesman for the Smurfit Consortium, Ian Halliday, who will become chairman of the Whakatāne Mill, said the consortium looked forward to developing a more competitive operation.

The mill will stop producing liquid packaging board and  will focus on its customers’ requirements for high-quality folding box board, carrier board and food service board, all of which are currently manufactured at the mill.

Mill general manager Juha Verajankorva said the agreed acquisition by the Smurfit Consortium  represented a new   era for the mill.

“Our preference was always for a sale of these assets so that they could continue to be productive. It took until almost the final whistle, but this is a satisfying outcome,” Verajankorva said.

On  a  broader  front,  the  Whakatane outcome   should  trigger  a   fresh look  at an industry plan to transform the wood industry . It’s  reported  to have been in the works with government officials for some time.  But  clearly  ministers, instead of  kicking  it  to  touch,  should be actively  pursuing  it.