Power price pinch sees ‘indefinite’ closure for two mills, hundreds of jobs could go

Tuesday, 20 August 2024

Ruapehu's Winstone mills, facing soaring electricity prices, have halted operations, putting 300 jobs at risk. Electricity costs have surged 600% since 2021. The company seeks solutions while local jobs hang in balance.

Hundreds of jobs are on the line in the Ruapehu District, with a key employer - Winstone mills - confirming it plans to close two mills.

Ruapehu’s Winstone pulp and timber mills halted production earlier this month, as New Zealand’s electricity prices sky rocketed.

At the time, New Zealand’s wholesale electricity price was abut 15 times more than the Australian average - leading Deputy Prime Minister Winston Peters to call it an energy “crisis”.

After that temporary two-week shut down, Winstone chief executive Mike Ryan confirmed he planned to shut the mills “indefinitely”.

Ryan, alongside other forestry industry leaders, met with ministers at Parliament two weeks ago to discuss the cost of power. At the time, he said it was a last ditch effort to try and find a way to keep the mills open.

But on Tuesday, he confirmed to Stuff that he did not see any way to keep the mills operating.

“If confirmed, the proposal would see WPI cease operations indefinitely with the loss of 230 roles,” Ryan said.

Workers at two of Winstone's mills have been told to lay down their tools.

Staff at the Karioi Pulp Mill and Tangiwai Sawmill met on Tuesday. After the meeting, they told Stuff the outcome would be “disastrous” for the communities that relied on these mills. The populations of nearby towns, Ohakune, Raetihi and Waiouru, are small.

While 230 jobs were set to go at the mills, there be many more impacts at other businesses. The mills provide work for contractors and logistics companies across Ruapehu.

Government concerned about rising power prices, and in part blames the Labour government for stopping exploration for natural as.

There had been hope that the Government of power companies, most of which are partially owned by the Government, would come to the table with a rescue package.

But no fix has arrived. And so these jobs are set go, just like the 75 jobs lost at a recycling and paper mill in Penrose, Auckland. Its owner, Oji Fibre Solutions, confirmed in early August that power prices meant the mill was no longer profitable.

Ryan said the unstable price of electricity meant the business could not continue. He said the price Winstone paid for electricity had risen 500% since September 2021.

Staff would be offered voluntary redundancy. Those who did not take that would remain on full pay during a consultation period. That consultation would conclude on September 9, Ryan said.

He said Winstone had hedged against electricity market volatility, but its contracts were up for renewal.

“The cost of replacing them has been unaffordable in the context of remaining globally competitive,” he said.

‘’Realistically, no hedging policy or future efficiency improvements will offset the structural increase in energy costs.“

He said it would take New Zealand “years or even decades” to fix the electricity market with new power generators.