Trouble at Mill

Written By: - Date published: 1:00 pm, September 12th, 2024 - 25 comments
Categories: Abuse of power, Christopher Luxon, climate change, david seymour, energy, Environment, Politics, science, Shane Jones, simeon brown - Tags:

This week Malaysan owned Winstone Pulp International Ltd announced the closure of its two mills in the Ruapehu area, resulting in the loss of 230 jobs.

The announcement has devastated the local community. These were reasonably paid unionised jobs. The loss of this many jobs so quickly will have a severe effect on the area.

There was talk about furious negotiations happening behind the scenes but if they did happen there is precious little to show for them.

Instead there appears to have been the typical right wing response to the prospect of saving jobs. Essentially the Goverhment decided to to leave it to the market to sort things out.

David Seymour did not shed a tear. From Giles Dexter at Radio New Zealand:

Unfortunately, any government that goes out to prop up a business, no matter how much your heart tells you you should, your head reminds you actually you can’t do it, you’re just delaying the change”.

Simeon Brown was also dismissive.

You know the government can’t intervene in every business and industry, a lot of work happening and it’s all about ensuring New Zealand has globally competitive energy prices”.

Louise Upson presented a slightly friendlier comment but the essence of what she said was the same:

[It] wasn’t felt that we could make a difference in this case. Unfortunately the Government isn’t in a position to step in and save every business, including this one”.

Christopher Luxon’s trip to Malaysia was badly timed. From Stuff:

Mill worker and E tū union delegate Daniel Abernathy told RNZ that what’s put salt in their wounds is seeing Prime Minister Christopher Luxon over in Malaysia promoting New Zealand investment opportunities just last week.

“He was talking about being in Malaysia and trying to encourage Malaysian owned businesses to come and invest… well we are a Malaysian owned company, so how are you going to get others to come if you’re not looking after the ones we’ve got working here?,” he said.

Mayor Weston Kirton was also feeling incredibly disheartened and dejected about the closure, and lack of government support.

“Our council is so disappointed the fact it’s ended up like this. We did go to central government, we thought there could be a package to bail out this company because they (power companies) have made so much profit out of energy and that appears to be going into government coffers instead of the pockets of our local people.

“That’s what hurts the most, the fact that money earned from energy companies is not going back into industry. I was so upbeat about the prospect of something coming out of this and we fought pretty hard on behalf of the community,” he said.

Shane Jones has gone on the offensive by railing against the power companies while at the same time appearing to not understand that the Government actually owns a large part of the power companies.

And National’s talking point, that the power crisis is all because of Labour’s banning of new permits for off shore oil and gas, is getting tedius.

Funnily for two professed christians Christopher Luxon and Simeon Brown continuously go precariously close to uttering falsehoods by accusing Labour’s off shore exploration ban of being the cause.

It does not matter how often you say that the ban did not affect existing permits, that even though there had been extensive searches no new gas fields had been discovered since 2002 or that even if a new field was discovered it would take at least ten years for the field to come into production, they still blame Labour. This is lazy throw away politics guaranteed to grab a headline and upset those who do not understand.

And frankly it is dishonest. Luxon and Brown should consult their bibles because there is quite a bit in there about the importance of truth.

And besides there is a rush of renewable energy projects coming online.

From Eloise Gibson at Radio New Zealand:

A long list of 147 solar, wind and geothermal projects have been announced by companies eager to find investment for a renewables boom.

Massey University mathematics professor and climate writer Robert McLachlan said if every solar or wind farm that was announced got built, New Zealand would be flush with renewable energy.

The Electricity Authority’s generation pipeline said 10,000 gigawatt hours of new supply were being actively pursued out to 2026, equal to between a quarter and a fifth of the country’s annual power consumption.

But McLachlan said less than a fifth of that was fully committed or close to committed before the end of next year.

“In the short term there will be more projects approved.

“I don’t think there’s enough for next year,” he said.

Wholesale prices looking forward suggested shortages may happen again next winter, especially if it was another dry one for hydro dams, he said.

“There is an enormous pipeline of possible projects, like stupendously large, the question is, is the market structured so enough of them will actually be built.”

After over a decade of very little new generation, a boom since the start of 2023 saw enough renewable electricity added to power 7 per cent of the country’s consumption.

This winter’s stretched market would have been worse if those new renewable plants were not built, to take some of the pressure off, McLachlan said.

The electricity market is the problem.

If you want proof these screenshots from NZX’s reports on daily power prices provides it.

Here is the report for August 12, 2024, at a time when there was considerable volatility. Prices peaked at $956 on the West Coast and the average nodal price varied between $415 and $550.

And here is the report for September 10, 2024. Highest price was for the North at $148 and the average nodal price was between $40 and $60.

The Government’s solution, the use of Liquified Natural Gas, will bind us into an expensive solution when the use of renewable energy is a much more economic solution. As pointed out by NoRightTurn “imported LNG means an electricity price of $260 / MWh – lower than current crisis levels, but over twice the “normal” price that industry expects.” Check out the above prices if you need verification.

And LNG is not better for the environment than coal. When you factor in the release of methane caused by the production of LNG if you are concerned about the environment you would not touch it.

Clearly the Government has no transition plan, as is shown by its refusal to step in and save the mills.

And its long term plan will hamper efforts to deal with climate change.

25 comments on “Trouble at Mill ”

  • Comments are now closed

  1. Bearded Git 1
    12 September 2024 at 1:30 pm

    Lprent-You have fallen into the trap of accepting Winstone's pathetic excuse that the closure of the mills was due to power prices rises.

    This is what Luxon and Brown want everybody to think so that they can blame Labour and proceed with the idiotic LNG importation scheme.

    In fact, as I explained in a post yesterday, and previously, the closures have very little to do with rising power prices and probably are due to falling wood pulp prices with perhaps a dash of crap management thrown in.

    • bwaghorn 1.1
      12 September 2024 at 3:01 pm

      1 rumor I heard was that the pulp mill was up for a $25 million rebuild of its oxidation ponds.

    • SPC 1.2
      12 September 2024 at 4:25 pm

      Really? It did mention National not being willing to subsidise power cost to save businesses. And note the power price expense of the LNG choice.

      It also noted the outright lie from National that gas exploration policy is somehow relevant the power market.

      And noted the irrelevance of Shane Jones to either intelligent policy formulation or insight about the past – given NZF opposed the power company share sale.

  2. gsays 2
    12 September 2024 at 1:53 pm

    I am genuinely curious as to what Simeon Brown means by:

    "ensuring New Zealand has globally competitive energy prices”.

    Can any of the free-marketers explain?

    What do domestic energy prices have to do with anything?

    • Ngungukai 2.1
      13 September 2024 at 10:18 am

      But Mad Max Bradford said that the Privatisation of the Power Companies would lead to more competitive power pricing ??? FFS it definitely hasn’t worked out that way. We the taxpayers have been rooted left, right and centre. Lying, theiving little pricks.

    • Ngungukai 2.2
      13 September 2024 at 10:26 am

      Sir Simeon is an ex Bank Teller I sure he has the necessary skills to sort these minor problems out.

  3. Ad 3
    12 September 2024 at 3:53 pm

    What is this government's plan for the economy?

    The centre of the North Island is dealing with the collapse of its tourism industry based around snow and the enforced closure of Chateau Tongariro, and the collapse of the entire ski lift system as a commercial going concern, and now the collapse of its forestry sector.

    None in the government coalition have anything to offer.

  4. SPC 4
    12 September 2024 at 4:27 pm

    That the government cannot work out

    1. how to connect dots as per the management regime for the smelter (as per the grid) and methanex plant (our largest gas user).
    2. that if there is the fact widespread uptake of home solar (at little or no cost to the power companies) that reduces demand for power off the grid lowering price to business.

    is astonishing.

    Subsidy to homeowners (and solar power business) to adopt solar panels reduces their cost and also cost to business.

    So stupid they cannot do right by voters or business. They are unfit for government.

    • Ngungukai 4.1
      13 September 2024 at 10:21 am

      But this is the Government NACTACTNZF that New Zealander’s wanted after the particularly nasty PM Jacinda Ardern ???

    • Bearded Git 4.2
      13 September 2024 at 10:41 am

      +100 SPC

    • Graeme 4.3
      13 September 2024 at 11:22 am

      To be fair Labour couldn't figure it out either and kept pushing just the big state solution of Onslow.

      A smarter approach would have been to be running a platform of both Onslow and domestic solar, as they did similar things but at different time scales. Even an either / or proposition would have got a better outcome. A mass h domestic solar program had a lot of favour with the tradie double cab set here, and probably still has. Votes for the plucking for whoever put's it up.

  5. Nigel Haworth 5
    12 September 2024 at 4:50 pm

    A long time ago – late 70s and early 80s – a group of us worked with the Scottish TUC on multinational plant closures in Scotland. To cut a very long story short, we had to do forensic studies on accounts (often "leaked" by disgruntled managers, offended by senior management behaviour) to assess whether the public story for closure was supported by the company's data and decision-making. In one case, the purported story – alas, overheads were too high and we must close – turned out to be a story about subsidised relocation within the EU (much bigger hand-outs to be gained in Europe). Perhaps a rational business decision, but not the one shared with the employees, or the British government. Of course, the impact on the Scottish workers was no different, but workers deserved to know why their livelihood was being cast aside. I learnt then to take management explanations of anything very slowly. Sometimes management tells the truth; sometimes it is more "flexible" with analysis; sometimes it tells lies.

  6. Muttonbird 6
    12 September 2024 at 6:43 pm

    Ideological intervention and very poor economic management by the government has caused many businesses to close but the rubber hits the road when they stand by and watch rural economies and the families of regional workers suffer because of their decisions.

    I can't count the number of times NZF has talked have said they are going to up value the forestry industry.

    We could be the Sweden of the south and sell engineered and designed wood products to about 2 billion people in Asia. But, no we'll sell them logs instead.

    Mill closures in central North Island make that concept now light years away.

    • Bearded Git 7.1
      12 September 2024 at 7:21 pm

      Excellent….the extra gas will carry us through the next 5 years by when the mass of consented renewable projects that are in the pipeline will start to become part of the grid.

      And the hydro lakes are now filling up rapidly too.

      Crisis….what crisis?

  8. Binders full of women 8
    12 September 2024 at 7:08 pm

    I love renewables so any party that says the following would have my vote…"the 230 sacked workers are going to be redeployed building a dam in the central North Island with fast track consent approval " Think-big, Truman new-deal, it's a proven formula. Bros stay in work, more power is generated, prices come down.

  9. joe90 9
    13 September 2024 at 11:32 am

    When your stated priorities were to champion the interests of rural and provincial NZ – health, education, crime, mobile coverage, RAL….

    /

    Rangitīkei MP Suze Redmayne ‘absolutely gutted’ at mill closure, warns shops and health service will feel the blow

    https://www.nzherald.co.nz/nz/politics/rangitikei-mp-suze-redmayne-absolutely-gutted-at-mill-closure-warns-shops-and-health-service-will-feel-the-blow/KPQX4MGU45A4ZCKWTL5CZ6JEKI/

  10. John Yates 10
    13 September 2024 at 12:22 pm

    May I point out that the wringing of hands and lamenting what mght have happened and why, still has resulted in both mills closing.

    The opportunity is now present for a local local initiative//consortium to pick the whole lot up and run it profitably. its as clear as day so lets gather and create a new company to

    pick up the baton. Lccals, Iwi anyone, some money smarts, some clients who still want what these mills were producing and community stays solid BUT with skin in the game now.

    Not that hard really, Rather than bleating about Govt coming to save the day. it aint happening NZ. Lets just do it ourselves and create a super success from what is

    generally seen as beyond repair. \

  11. benby 11
    15 September 2024 at 4:30 pm

    A bad electricity system easily destroys a country. Look at South Africa: https://www.youtube.com/watch?v=Iiny1GrfhYM — sure, SA has other problems, but electricity has massive effects.

    When thinking of this "government", always remember that.