Rising energy costs were a contributing factor to three years of losses at the Penrose mill, the company said. Photo: AFP
The country's largest paper and pulp company is considering closing its paper recycling mill in Auckland because power prices are too high.
In a statement, Oji Fibre Solutions says its Penrose mill has suffered three years of losses caused by a number of issues including rising energy costs.
Chief executive Dr Jon Ryder said the company has looked at improving technology to save money but it hadn't worked.
The company could manage its supply of recycled paper for box making and wastepaper collection with other assets, he said.
But closing the Penrose mill would reduce capacity to produce recycled paper and increase wastepaper sent offshore.
Oji would begin consultation with its 75 staff at the Penrose site to consider if any alternatives had been overlooked.
Ryder said Oji had suffered large losses with no prospect of the situation improving.
"These losses are caused by several issues, including dramatically rising energy costs.
"We've looked at different options to improve the mill, including technology to save input costs. Unfortunately, these efforts have not been successful to date."
Oji Holdings already operates a larger and modern plant in Malaysia that can ensure supply of quality recycled paper for its box-making operations in New Zealand and Australia, the company statement said.
Ryder said the company understood this is an uncertain time for its "skilled, dedicated people" as well as some suppliers.
At the same time, the Major Electricity Users Group said some members are buckling under the power price pressure.
Wholesale prices have risen sharply with averages going from around 100 dollars per megawatt hour in September 2021 up to around 700 dollars on Tuesday.
Timber company Winstone Pulp International has temporarily closed two operating sites as a result and is considering its future.
Major Electricity Users Group chair John Harbord said the government and the Electricty Authority had not been willing to find out what is behind the price spike.
"At no point have we really had a robust look at it. And the confidence that the government or the regulator will do so is low that the Major Electricity Users Group is in the process of commissioning some analysis of our own.
"One thing we don't need is a kneejerk reaction or rush to a solution until we really identify what is the driver behind it."
Unions at the mill have called for the government to step in to reduce wholesale energy costs.
First Union organiser Justin Wallace said the announcement made at a meeting at 8am had come "like a bolt out of the blue" for workers.
One outcome of the proposal would be to see recycled paper and carboard shipped to Malaysia for pulping, he said.
E tū industry organiser Joe Gallagher said workers had been told by the company the mill, which turns recycled paper and card into pulp, was the most efficient site Oji had in the country.
After hearing the company announcement, workers attended a meeting and were then given the rest of the day off by the company.