A major employer has been forced to put a two-week “operational pause” in place across its sites.

Ruapehu’s Karioi pulpmill and Tangiwai sawmill are under a two-week “operational pause”. 

Employing close on 300 staff, the mills are operated by Winstone Pulp International.

Chief Executive, Mike Ryan says energy prices are the main driver behind the move.

“Since September 2021, energy prices have increased more than 600% - from $100/MWh (megawatt hour) to a futures price expected to average over $700/MWh for the month of August. 

“Despite the team’s best efforts, energy costs have risen from 15% of our total production costs to in excess of 40%.

“We can’t pass these increases on to our customers because this is a New Zealand issue, and we sell into a commodity market where the price is the price.”

He adds that overseas competitors are paying $60 to $100/MWh.

The company has a historic policy of maintaining a high level of energy price hedging to help manage the risk of increases and volatility, he says.

“However, as these arrangements have come up for renewal, the cost of replacing them has been unaffordable in the context of remaining globally competitive.”

Staff are still working normal hours at both sites but are focused on maintenance and other activities.

He says a step change in pricing is necessary to make manufacturing viable in the long term which would require “some sort of government intervention”.

“We need to be able to see long-term energy price stability and affordability. Without this certainty, our options are limited.”

Jobs are also in jeopardy at OJI Fibre Solution’s Penrose Pulp Mill in Auckland. The mill, which employs 75 workers, is likely to close by mid-December. Union representatives are calling on the Government to urgently step in and save the mill by reducing wholesale energy costs in any way possible. The Penrose-based mill, which turns recycled paper and card into pulp.

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