Norske Skog plans Australasian mill upgrades

The project includes an upgrade and capacity increase of both PM 2 and PM 3 at Tasman, a capacity increase at Albury, and shutting down the high-cost PM 1 at Tasman in 2nd half of 2006. The combined production of the two mills will remain largely unchanged as a result of the restructuring with the upgrades offsetting the production loss of Tasman PM1. The main investments will take place at Albury, and consist of a rebuild of the paper machine including a shoe press and a new winder.

Jan Oksum, Norske Skog president and CEO, says, “This project shows our commitment to our customers and our business in the region, as it will further enhance our product quality. Furthermore, it will significantly reduce the cost level in the region. The project has very low risk, since it is a cost reduction project in the region where we have the most stable business conditions.”

Employee numbers at Tasman will reduce due to the shutdown of PM 1 and the related activities within wood handling and mechanical pulping. The number of employee reductions will be confirmed after further consultation with employees and their unions.

Distribution costs in the region will be significantly reduced, as 50,000 tonnes currently being shipped from New Zealand to Australia, will be produced at Albury in the future.

A charge of US$35m will be booked in Norske Skog’s accounts in Q 2 2004. The amount is related to the book value of Tasman PM 1, some equipment at Albury and expected redundancy payments at Tasman.

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