Norske Skog has sold its Albury paper mill, used to produce newsprint, for $85 million, with the mill set to cease the production of newsprint by the end of the year.
In addition, 183 employees are set to be made redundant, at a cost of $34 million to the company.
The closure reflects the market reality of over-capacity, with Norkse Skog able to produce much more newsprint than needed between its Australia and New Zealand operations. Almost half of the Norske Skog newsprint between Australia and New Zealand is being sold onto the export market, where the company sees very small returns.
Consumption of newsprint in Australia has fallen by an average of 11 per cent over the past 10 years, according to IndustryEdge.
While newsprint demands have fallen, e-commerce has seen a strong rise in packaging demand. Visy has not yet fully outlined its plans for the site, though the sale included its water rights, with the mill located on the banks of the Murray River, and access to 400,000 tonnes of wood each year for virgin fibre pulp production.
Combine that with the potential for the site to be transformed towards the production of packaging grade papers, and there is potential for some jobs to return to the region.
The Albury site also has recycled fibre operations, further adding to its value, with Visy committed to the 2025 packaging target.
Norske Skog CEO Sven Ombudstvedt said, “The closure of Albury will address the substantial imbalance between newsprint production capacity and customer demand in Australasia and unlock the Albury mill’s position as an ideal candidate for conversion into packaging grades.”
Speaking to reporters, many workers at the Albury mill have said that the closure was somewhat expected. Norske Skog will continue its production in Boyer, Tasmania and Tasman in New Zealand.
Albury had an annual newsprint production capacity of 265,000 tons.
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