PM calls closure of Oji Fibre paper recycling mill ‘tragic’
Wednesday, 18 September 2024
Prime Minister Christopher Luxon has labelled the announcement that Oji Fibre will close its paper recycling mill in Penrose, Auckland with the loss of 75 jobs as “tragic”.
Oji Fibre chief executive Jon Ryder said it was a sad day for the company and particularly its Penrose Mill employees.
“While this closure will impact directly on our 75 people at the mill, we will continue serving our customers with as little disruption as possible,” he said.
Oji Fibre began consultations on closing the mill last month at time when near-record low hydro lake levels and a gas shortage were pushing up energy prices.
Ryder said then that the mill had been losing money for three years in part because of “dramatically rising energy costs”.
The closure of the mill would not affect Oji’s recycling business which would continue to collect waste paper and recycle about 90,000 tonnes of cardboard per year at its Kinleith Mill, near Tokoroa.
Other waste paper will be sent to an Oji Group mill in Malaysia, Ryder said.
“I would like to emphasise that this decision to close Penrose Mill is in no way a reflection of the calibre, dedication and skill of each and every one of our 75 staff there,” he said.
First Union organiser Justin Wallace said the mill closure was avoidable and driven largely by high wholesale energy costs and “a lack of Government intervention when it matters most'.
“One of the members came up to me and said ‘look, Justin, what do I do now, I’ve just bought a house,” he said. “It's not just the workers who are impacted, it’s their families.”
E tū negotiator Joe Gallagher said the closure sent a very bad message to other manufacturers who were struggling with runaway energy prices.
“Politicians have not come to the table with solutions — they’re long on rhetoric and short on delivery.”
Luxon blamed the previous government for the job losses.
“What we're seeing is the lag effect of economic mismanagement, where unemployment is on the rise as firms are having to lay workers off after having dealt with the recession, high interest rates and high inflation,” he said.
A spokesperson for Oji said energy was not the only factor influencing the closure.
“Various other costs have also risen, including those related to labour and freight. We have actively explored ways to mitigate these expenses, including potential capital investments,” she said.
Ironically, the decision comes just after hydro lake levels rapidly refilled to above average for the time of year, thanks to heavy rain and melting snow.
Transpower reported on Monday that hydro levels were 104% their average level for the time of year on Sunday, after falling to just 55% of average in August.
Spot market electricity prices have fallen since August, frequently trading around zero, although the current cold snap and maintenance work on the Cook Strait cables has resulted in some volatility this week and long-term wholesale power prices remain high.
The spot-market price of natural gas has also plummeted in the wake of the country’s biggest gas user, Methanex, temporarily shuttering all its production until the end of next month.
Gas has been consistently trading at less than $10/gigajoule this month, after spiking to a high of $55/GJ in August.
Wallace said large businesses tended to take long time to change direction.
“Once they make their decision, they tend to not change it, unless something quite dramatic happens.
“We were hoping that central government might intervene somehow, but it just doesn’t seem to have happened.”
The job losses come of top of 230 redundancies at Winstone’s timber and pulp mills in Ruapehu last week.
Methanex is also understood to be considering making about 70 staff redundant as it considers idling one of its two remaining methanol-manufacturing plants indefinitely due to the long term outlook for gas supply.
The plant, at Waitara Valley, has been mothballed since March, and at other times in the past when gas been in short supply.