Image courtesy: WPI
Winstone Pulp International (WPI) has announced its plans to cease its operations due to skyrocketing wholesale energy prices.
In a statement issued on Tuesday, Winstone Pulp announced that it informed employees of a proposal for an indefinite closure. If the plan proceeds, 230 people from their two sites—the Tangiwai Sawmill and Karioi Pulpmill—would lose their jobs.
Winstone Pulp’s chief executive officer, Mike Ryan, stated that energy costs have surged from $100 per megawatt hour (MWh) in September 2021 to $500 per MWh as of August 2024. He indicated that electricity now constitutes over 40% of the company’s total costs, and the significant rise in energy prices cannot be transferred to customers.
Consultation is said to be underway, giving staff the option of taking voluntary redundancy and being set to remain on full pay during the consultation period. The company is said to have done all it could to avoid closing, including improving production and energy efficiency and energy price hedging.
Winstone Pulp also reported that its recent lobbying efforts regarding the energy crisis led to electricity gentailers offering discounted rates. However, these offers were insufficient to remain internationally competitive.
The Port of Napier, which handles a significant portion of Winstone’s pulp and timber shipments, has been informed of the situation. Chief executive Todd Dawson mentioned that a closure would negatively impact the port’s earnings.
“While we don’t know the final outcome of WPI’s process, which could include the retention of some or all of their cargo trade, the loss of WPI’s cargo would be a setback for Napier Port.”
“Our thoughts are with everyone at WPI. We feel incredibly disappointed that they are confronted with no option but to consider ceasing their operations due to current and ongoing challenges related to abnormally high energy costs.” he said.
A final decision regarding the closure of Winstone Pulp is anticipated on Monday, September 9.
Record-high electricity prices are placing considerable strain on companies and forcing them to seek solutions. Recently, Methanex announced a temporary shutdown of its methanol plants as part of an agreement to sell gas to Contact Energy and Genesis Energy. The agreement is said to support the security of electricity supply to New Zealanders. Additionally, forest products company Pan Pac has resumed its pulp production, though only on a limited scale, following a temporary shutdown caused by rising energy costs.