Norske Skog Albury mill to close by Christmas

PAPERMAKER Norske Skog has announced the closure of the Boyer Mill's sister factory at Albury following the ongoing drop in demand for newsprint from Australia's newspapers.

The Albury mill opened in 1981 - 40 years after Boyer - and many of its original workers transferred from New Norfolk to get it up and running. The closure will return Boyer to its original status as the only producer of newsprint in Australia, although some newspapers receive their paper supply from Norske Skog's Tasman mill in New Zealand.

Norske Skog president and chief executive Sven Ombudstvedt today announced the sale of the Albury mill to paper, packaging and recycling group Visy for $85 million. "The sale of the mill and realisation of certain other related assets, including energy and water rights, will generate total cash proceeds of approximately $150 million," Mr Ombudstvedt said.

Albury will cease newsprint production by the end of December and Norske Skog will pay redundancy payments and transaction costs of approximately $35 million, resulting in net cash proceeds to Norske Skog of approximately $114 million. Norske Skog filed for bankruptcy in December 2017 and was sold to British investment firm Oceanwood last year.

“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,” Mr Ombudstvedt said.

Norske Skog's Albury Mill, at Ettamogah, New South Wales.

Mr Ombudstved said that following the completion of the sale early next year, Visy intended to undertake feasibility studies on future uses including the production of packaging-grade papers at the site. Visy is one of the world's largest privately-owned paper, packaging and recycling companies.

"The sale and net proceeds from the transactions will further strengthen the group’s underlying operations, balance sheet and financial capabilities, and thereby provide increased robustness for attractive dividends in the years to come," he said.

Mr Ombudstvedt expressed the company's gratitude to the employees at Albury. “I would like to thank everyone at Albury for their valuable contribution to the company throughout the years. This decision is in no way reflecting their efforts, which have been outstanding.

"Unfortunately, as a business, we must always respond to prevailing market conditions and the decline in domestic sales in Australia and New Zealand and very volatile Asian export markets made this the best solution for Norske Skog and our owner.”

Publication paper production will continue at Norske Skog’s two other Australasian mills, at Boyer in Tasmania, and Tasman in New Zealand. Mr Ombudstvedt said Norske Skog’s long-term strategy was  to improve the core business, to convert some of the group’s paper machines and to diversify the business to the bioenergy, fibre and biochemical markets.

Diversification has long been the practise at Boyer, from the establishment of a veneer plant in the 1980s and the switch from old-growth hardwood to plantation-grown softwood, to the more recent conversion of one of its machines to produce lightweight coated paper and the production of a non-toxic solvent.