ACCC investigates ANZ newsprint supply consolidation

The company confirms it has lodged a submission with the ACCC to head off any complications over market influence. Currently the company supplies around 70 per cent of the 720,000 tonnes of newsprint consumed annually in Australia, and all of the150, 000 tonnes in New Zealand.

Despite such market dominance, the ACCC is not expected to take action as the world market for newsprint is highly competitive and publishers are able to land supplies at optimum rates if they want to. Under the current marketing regime, Norske Skog and the publishers have an off take agreement that sets the price per tonne as an average over three year’s rates. This allows the publishers to avoid the fluctuations of the global market.

PanAsia is the largest newsprint producer in Asia with five paper mills – two in South Korea, two in China and one in Thailand – producing 1.8 million tonnes per year. Canadian firm Abitibi-Consolidated formerly held the other 50 per cent of the company.

“Sole ownership of PanAsia will give us full access to the largest and fastest-growing market for newsprint in the world,” says Norske Skog chief executive Jan Oksum. “The investment is fully in line with our strategy. We have gradually increased our holding in PanAsia over the last seven years, and we will be taking over a modern and competitive company.”

Norske Skog has three paper mills in Australasia; the Albury and Boyer mills in Australia and Tasman in New Zealand. Together these mills have an annual capacity of more than 900,000 tonnes of newsprint and related grades, with sales worth around Aus$1 billion.

According to Robert Eastment, publisher of Industry Edge, the pulp and paper industry’s bible, www.industryedge, the market conditions for newsprint are extremely dynamic with the move away from broadsheet newspapers to tabloids potentially cutting the amount of newsprint used. “The increasing use of colour is also putting pressure on Norske Skog to continually upgrade the quality of its newsprint. At the moment the market is subject to a lot of change,” he said.

Because of the global supply conditons of newsprint he does not expect the ACCC to become involved in what is essentially an international transaction.