Tasmanian mills costing paper company a packet

PaperlinX deems the continuing losses from its two Tasmanian paper mills as unacceptable and looks to the Federal and State Governments for help in keeping them open.

After completing a review of its Tasmanian paper manufacturing business, Tas Paper, PaperlinX is still considering its options, which includes the retention of the exiting business model, partial closure, full closure or sale.

According to Tom Park, (pictured) CEO and managing director of PaperlinX, the review has allowed the company to think through each option and meet the needs of all stakeholders.

“The review projected an unacceptable financial loss for Tas Paper in the current environment, so we will now work with all of the key stakeholders to develop models that may product more positive future outcomes,” he said.

Park said that PaperlinX is continuing its discussions with both the Tasmanian and Federal governments, and will also look for any guidance to come from the Federal government’s review of the Australian Pulp and Paper Industry, which will be completed later this year. With a state government election coming up next year the prospect of of over 500 jobs disappearing from the island will give the company considerable leverage in obtaining government assistance in keeping them operating.

Part of the problem is that after years of no investment, the two mills at Burnie and Wesley Vale will cost more to shut down than any propsective buyer is likely to pay for them. Estimates of up to $150 million in redundancies and site reclamation mean the company would be better off giving the mills away, if anyone was brave enough to step up.

The two were deliberately excluded from the sale of the company's other mills at Maryvale and Shoalhaven to the Japanese producer, Nippon Paper, last month.

The company is putting the best face on it, but it is under the gun from falling volumes in its worldwide paper business and can ill afford to rpop up two loss-making paper mills. “We will continue to run Tas Paper as we have in the past and our customers will not see any change in service or product quality,” said Park.