Norske Skog to close Albury, Visy to buy mill for $85m

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Australasia’s largest newsprint mill, the 265,000 tonne per annum Albury Mill (NSW) will close by the end of the year, writes Tim Woods at IndustryEdge. All of the mill’s approximately 185 employees will be made redundant.

To be closed: Norske Skog newsprint mill at Albury
To be closed: Norske Skog newsprint mill at Albury

The closure reflects the plummeting demand for newsprint in Australia, with national, suburban and regional papers all seeing pagination shrinkage.

Announcing the closure, Norske Skog advised that it had sold the Albury assets to Visy, Australia’s largest paperboard manufacturer. After remediation, the assets will be transferred to Visy, which reportedly plans to undertake feasibility studies into options for their use on the Albury site. The sale price of the assets was reported as $85m.

The company itself has not over-played this, but IndustryEdge is aware that the leadership of the regional company (Norske Skog Australasia) examined all of the available options to continue operating the thirty-eight year old mill.

Eventually, it came down to just two options: a closure with no potential for future employment and regional economic activity, or a sale with opportunities for a different future.

There is a steely logic to the closure of the largest newsprint machine in a falling market. Had the conditions come about such that capacity had to be reduced earlier, then a lower capacity Norske Skog machine at Boyer (Tasmania) or New Zealand (Tasman) would have been closed. However, once production was over-weight to the market by anything more than about 150,000 tonnes per annum, the closure of any other machine would not suffice.

Norske Skog exported almost half its newsprint consumption in 2018-19. Export returns have been so indifferent in the first half of 2019 that Norske Skog curtailed newsprint production at all three mills in the region. It did so because it was unable to recover its production costs.

The pain was amplified for Norske Skog because the export volumes have been so large, the company may have been losing more money on Newsprint exports than it was making on domestic sales.

Our assessment is that with a market in constant decline, consumption across the region about to fall below the capacity of the Albury Mill and exports no longer viable, Albury’s future was always limited.

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