New Zealand’s Winstone Pulp International Plans to Shut Down Operations Due to High Energy Costs

On Tuesday, New Zealand’s Winstone Pulp International (WPI) said it plans to shut down its entire operation as a result of high wholesale energy prices, RNZ reported (8-20-24). If the plan goes into effect, 230 people will lose their jobs.

Earlier this month, the company paused work at its two sites—Tangiwai Sawmill and Karioi Pulpmill—to consider its future.

WPI chief executive Mike Ryan said that energy prices have increased from NZ$100 per megawatt hour (MWh) in September 2021 to NZ$500 per MWh in August. Power now makes up more than 40% of the company’s costs, and the increase can’t be passed on to customers.

“For comparison, our overseas competitors are paying between NZ$60 to $100/MWhr,” Ryan said. “At the same time, other input costs remain high and market prices for pulp and timber are relatively low and under pressure.”

WPI said its efforts to lobby on the energy crisis in recent weeks had resulted in electricity providers coming forward with discounted offers. But WPI said it was not enough to remain internationally competitive.

Ryan said consultation was underway with all staff given the option of taking voluntary redundancy and set to remain on full pay during the consultation period. Ryan added that the company had done everything to avoid closing, including improving production and energy efficiency and energy price hedging.

The Port of Napier, which ships much of Winstone’s pulp and timber, has been advised, and chief executive Todd Dawson said a closure would hit port earnings.