Forest products company to shut down entire operations as energy prices hurt

photo: 123 RF

Winstone Pulp International, a major forest products company, is planning to shut down its entire business due to high wholesale energy prices.

Earlier this month, the company suspended work at its Tangiwai Sawmill and Karioi Pulpmill to Consider its future.

Winston Pulp said in a statement on Tuesday that it informed employees of the proposed indefinite closure at a meeting today.

If the plan goes ahead, 230 people will lose their jobs.

Mike Ryan, CEO of Winstone Pulp, said energy prices have risen from $100 per megawatt-hour (MWh) in September 2021 to $500 per MWh in August 2024.

He said electricity now accounted for more than 40% of the company’s costs, and the increased costs could not be passed on to customers.

“In comparison, our overseas competitors are paying between NZ$60 and NZ$100 per MWh. At the same time, other input costs remain high and market prices for pulp and wood are relatively low and under pressure.”

Ryanair said negotiations were ongoing and all employees were offered the option of voluntary redundancy and would still receive full pay during the negotiation period.

He said the company had done everything it could to avoid closures, including improving production and energy efficiency and hedging energy prices.

Winston Pulp said its lobbying on the energy crisis in recent weeks had prompted a flurry of discounts from electricity retailers.

But the company said that was not enough to remain competitive internationally.

The Port of Napier, where most of Winston’s pulp and timber is shipped, has been notified and chief executive Todd Dawson said the closure would impact the port’s revenue.

“While we do not know the final outcome of WPI, which may include retaining some or all of the cargo trade, the loss of WPI cargo will be a setback for the Port of Napier.

“Our thoughts are with everyone at WPI … We are extremely disappointed that they have been left with no choice but to consider ceasing operations due to exceptionally high current and future energy costs.”

Another Napier Port freight customer, forest products company Pan Pac, has restarted pulp production on a limited basis after temporarily stopping due to energy costs.

A final decision on Winstone Pulp’s closure is expected on Monday, September 9.

Other major energy users are also grappling with prolonged periods of extremely high wholesale electricity prices, including Closing its paper recycling plant In Auckland.