Norske Skog announces sale and closure of Albury mill in New South Wales
Norway-headed pulp and paper major Norske Skog ASA has announced the sale of its Albury newsprint mill in New South Wales (NSW) to Australia-headed packaging and resource recovery major Visy Group for NOK 520 million (AU$85 million). The sale of the mill and realization of certain other related assets, including energy and water rights, will generate total cash proceeds of approximately NOK 920 million.
According to a statement, Norske Skog Albury will cease newsprint production by the end of December 2019. Norske Skog will pay redundancy payments and transaction costs of approximately NOK 215 million following the closure, resulting in net cash proceeds to Norske Skog of approximately NOK 700 million.
I would like to thank everyone at Albury for their valuable contribution to the company throughout the years. This decision is in no way reflecting their efforts, which have been outstanding. Unfortunately, as a business, we must always respond to prevailing market conditions and the decline in domestic sales in Australia and New Zealand and very volatile Asian export markets made this the best solution for Norske Skog and our owner, said Sven Ombudstvedt, President and CEO of Norske Skog.
Albury has an annual newsprint production capacity of 265 000 tonnes and closure of the mill will substantially reduce the newsprint production capacity in Australasia and reduce the region’s export exposure to the Asian market. The Albury mill generated revenue of approximately NOK 1 billion in 2018.
Completion of the Albury mill transaction is expected to take place in the first quarter of 2020 subject to customary closing conditions, but no regulatory approvals are required. The sale of the Albury mill is in line with Norske Skog´s communicated strategy of optimising its portfolio and seek value-enhancing transactions.
Continue with core business strategy
Publication paper production will continue at Norske Skog’s two other Australasian mills, at Boyer in Tasmania and Tasman in New Zealand. Norske Skog’s long-term strategy remains to improve the core business, to convert certain of the group’s paper machines and to diversify the business to the bioenergy, fibre and biochemical markets.
The closure of Albury will address the substantial imbalance between newsprint production capacity and customer demand in Australasia and unlock the Albury mill’s position as an ideal candidate for conversion into packaging grades, said Sven Ombudstvedt, President and CEO of Norske Skog.
Following completion, Visy Group intends to undertake feasibility studies on future uses including the production of packaging grade papers at the site. Visy is a global leader in the packaging, paper, and resource recovery industries, providing high quality, innovative and sustainable packaging products and solutions.
Headquartered in Melbourne, Victoria, Visy operates in over 120 sites throughout Australia, New Zealand, and Thailand and has trading offices across Asia and Europe. Visy has been leading packaging innovation in Australia for over 70 years.