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Japanese giant Nippon closes Australia’s last white paper plant

Japanese paper giant Nippon will close Australia’s last white paper plant, meaning 200 jobs will be lost at the Maryvale mill and native forest logging in Victoria could end sooner than scheduled.

The Japanese paper company’s Australian subsidiary, Opal, was one of a few remaining major customers of the state’s native timber industry, which is scheduled to close by 2030, with logging reduced from 2024.

The Maryvale mill, which opened in 1937, is the last producer of white paper in Australia – including for office use, exercise books and envelopes – and one of a few remaining major customers for VicForests’ native timber. It is the Latrobe Valley’s largest private employer.

In a statement on its website, Nippon said the company would withdraw from “graphic paper”, ie white paper, but would continue making paperboard, kraft paper, corrugated board and folding cartons in Australia and New Zealand.

Opal’s Maryvale mill sold graphic paper, paperboard and kraft paper. It sourced eucalyptus wood produced in Victoria’s state-owned forests from the state-owned logging agency VicForests, as the raw material for bleached pulp – the main ingredient of graphic paper.

In its statement, Nippon noted that in November last year the Supreme Court of Victoria issued court orders against VicForests that limited its ability to continue its native timber operations, making it impossible for Opal to procure eucalyptus wood from VicForests.

“In response to this sudden and unexpected suspension of supply, the company and Opal has been considering alternative wood supplies in order to continue graphic paper operations, but has concluded that alternative procurement is not feasible and has decided to discontinue the graphic paper business at the Maryvale mill,” the statement said.

The 220,000-tonne M5 paper machine at Opal’s Maryvale mill will be discontinued this year, and the withdrawal from the graphic paper business means Nippon is expected to record about 20 billion yen ($215 million) in the 2023 financial year as an impairment loss on fixed assets, it said.

After withdrawing from the graphic paper business, Opal will focus on its packaging business, which is expected to grow, and transition the mill into a sustainable packaging paper mill, the company said.

There has been speculation about the likely closure of the white paper plant, with state government and union sources braced for it and citing a lack of native timber supply from VicForests.

The CFMEU’s manufacturing division denied the closure was inevitable. Rather, it said it was the result of the state government mismanaging the native forest sector and a “bumbling” approach by the company’s local management.

The union warned the state government and Opal Australian Paper for three years about the risk of mass job losses and the loss of Australian manufacturing capacity, said national secretary Michael O’Connor.

“Both the government and the company failed to take the actions we implored them to take in order to prevent this disastrous outcome,” he said.

“The closure of white paper production at Maryvale means the loss of 200 jobs in the Latrobe Valley region, devastating families and communities.”

In 2019, the Andrews government announced it would phase out native timber harvesting by 2030, with a reduction in logging from 2024. Since then, volunteer-run community environment groups have taken VicForests to court more than a dozen times over allegations it has breached state logging laws.

Court rulings have prohibited the agency from logging native coupes without adequate wildlife surveying, which VicForests says has effectively blocked the supply of native hardwood timbers.

In a landmark case in November, Victoria’s Supreme Court found the agency had failed to adequately survey for endangered greater glider possums before logging, with its timber-harvesting operations in East Gippsland and the Central Highlands a threat of “serious or irreversible harm” to the gliders. VicForests is appealing against that decision.

In the past financial year, VicForests recorded an unprecedented $52.4 million financial loss, which it blamed on the cost of court cases. The figure is significantly higher than the previous year’s loss of $4.7 million.

The Victorian Greens have urged Premier Daniel Andrews to cease all native forest logging in Victoria.

“We simply shouldn’t make paper out of endangered species habitat, but the Maryvale mill closure shows the complete failure of the Victorian Labor government on logging,” said Greens deputy leader Ellen Sandell.

“They could have brought forward an orderly transition out of logging to protect workers, but chose not to.”

The end of white paper production means the workforce at the Maryvale mill will be reduced from 1000 to about 800.

The Victorian Forest Alliance, which represents community environment groups, including some that have taken VicForests to court, said the woodchipping of state forests has driven the decline of numerous threatened species for decades.

“A 30-year contract signed with Nippon to supply woodchips from Victorian native forests until 2030 was never going to be sustainable,” alliance spokesperson Chris Schuringa said.

“Businesses don’t want it, the Victorian public certainly don’t support it, and now the Andrews government must act to end it immediately.”

Minister for Industry Ben Carroll said it was important the company supported its workers, and the government was offering support.

“We’ll continue to work with them to ensure that they feel supported and that they have other options going forward,” Carroll said.

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