Fletcher pulp mill future paperthin

By Nicholas Bryant

Friday 14th April 2000

Norske Skog is downplaying talk from within Fletcher Challenge claiming the Norwegian paper giant is planning to sell Fletcher Paper's pulp operations as soon as possible.

The suggestion raises concerns about the future of the Kawerau Mill.

Norske Skog president of area international Vidar Lerstad said the company was in the process of selling both its Norwegian pulp mills but said "too much shouldn't be read into it."

"While we have first of all defined [high-grade] publication paper as our core business, that doesn't mean we couldn't be very happy operating a pulp business," Mr Lerstad said.

But Mr Lerstad admitted the organisation of Fletcher Paper's business at Kawerau into a separate operating entity within the mill gave Norske Skog the ability to sell easily if that became desirable.

"Organising it the way they have done keeps several options open," he said.

Norske Skog announced last week it would buy Fletcher Challenge's pulp and paper manufacturing business for $5.1 billion. The deal includes the Tasman Pulp and Paper Mill at Kawerau which employs about 1000 people, 650 in paper production and 350 in the pulp division.

Earlier this year Norske Skog sold both its pulp plants in Norway to Swedish company Sodra.

Mr Lerstad said the Fletcher deal would also give his company significant pulp operations in Canada and the intention was to run the businesses and make money from them.

"We haven't made any decisions or have any precise plans on how to develop the pulp part of this business," he said.

Norske Skog has committed itself to keeping Kawerau's employees safe in their jobs for two years once the deal is complete.

The talk of selling pulp operations has surprised the Engineering Printing and Manufacturing Union which praised the company last week.

Assistant national secretary Andrew Little said he would be disappointed if there was a hidden agenda behind Norske Skog's seemingly good intentions.

He added the union had been asking for indications of Norske Skog's plans without much success.

Analysts said if Norske Skog were to sell part of Kawerau then the only local company which might pick up the operation was cash-rich and looking-to-invest Carter Holt Harvey.

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