OPAL LOSES $64M ON WHITE PAPER CLOSUURE

Nippon Paper has booked a  loss of ¥4.9bn, approximately $64m, on the closure of its print and copier paper manufacturing operation at its Maryvale mill, operated by its Australian subsidiary Opal.

Nippon says that based on the progress of withdrawal from the white paper business, it expects to recognise the figure of ¥4.9bn as an “extraordinary loss” related to withdrawal from the business, including redundancy payments for personnel rationalisation, in the first quarter of FY2023/4.

In addition, the company expects to record in FY2023/4 an impairment loss of approximately ¥1.2bn, around $16m, on fixed assets due to a recent decision to shut the M2 paper machine.

The loss includes redundancy payments to the staff who operated both the M5 papermaking machine and the M2 line, which will close at the end of next month. The forced closure leaves Maryvale with three of its five lines, M1, M3 and M4, all of which are producing packaging grades, known as brown paper .

The M5 line was white papers only, it stopped making paper on Christmas Eve, the M2 machine was 50/50 white papers and packaging grades, the packaging grades are now being switched over to the remaining three lines.

Nippon Paper says the impact of the extraordinary loss on the consolidated earnings forecast for FY2023/4 has already been factored in and the earnings forecast will remain unchanged.

Opal was forced to close its white paper manufacturing when a Supreme Court Judge ruled in favour of a local possum, effectively stopping the operations of VicForests’ logging contractor. The Maryvale mill produced some 200,000 tonnes of white paper a year, half for commercial printing, and half of it copier paper, including the dominant Reflex brand, which is no no more. All that paper is now being imported from overseas mills. Opal's packaging grade manufacture at Maryvale is unaffected.