Norske Skog is to make lightweight coated paper in Tasmania as part of an $84 million plan to restructure capacity in Australia and New Zealand.

At the same time, a second newsprint machine is to be closed at the Tasman mill in a further bid to match supply to demand. GXpress understand that the company currently exports about 200,000 tonnes of newsprint to Asia… more than it makes for the domestic market.

The $84 million investment in the Boyer mill near Hobart will see one newsprint machine converted to make LWC, a move which has already been well received by local users.

President and chief executive Sven Ombudstvedt says Norske Skog is committed to the future in Australia. “With substantial funding support from the Australian government, we (will) strengthen the operations at Boyer,” he says. “This will create future growth opportunities for the Norske Skog group.

The machine conversion project will take place over the next two years, enabling it to produce coated grades for applications such as catalogues.

The Australian federal government will contribute A$28 million in grants to help fund the project, and the Tasmanian state government is providing an A$13 million loan. Completion is targeted for the first quarter of 2014.

Ombudstvedt says the permanent closure of 150,000 tonnes of capacity at Tasman is required to create a better balance between demand and supply for newsprint in the region. “There is today considerable surplus capacity of newsprint in the region,” he says. “Despite years of great efforts of the staff, the decision is unfortunately unavoidable.”

Implementation arrangements and timeframes will be subject to consultation with employees and other stakeholders, Ombudstvedt says. Final costs of the restructuring will be determined once the consultation process at the Tasman mill is completed.