Australia's only manufacturer of printing paper, Japanese-owned Australian Paper, is facing allegations that it refused to pay a $10 million debt owed to major supplier VicForests.
Australia's only manufacturer of printing paper, Japanese-owned Australian Paper, is facing allegations that it refused to pay a $10 million debt owed to major supplier VicForests.
The Gippsland-based Australian Paper, which has posted four consecutive years of losses, refused to hand over $10 million that VicForests said it was owed, according to a Department of Treasury briefing obtained by Fairfax media. Victoria's native timber was then offered to the paper mill at a discounted fixed price as part of a secret government deal to try to end the dispute over the unpaid debt, according to the report.
In a statement, Australian Paper, which produces Reflex paper and several other products, declined to address the allegations directly:
Australian Paper has several long-term fibre supply contracts covering local plantations, lower grade wood from VicForests and recycled wastepaper. We value all of these suppliers and won't comment on the specific detail of these commercial arrangements.
“The [Age] article confirmed that a price cap ‘was never formalised or enacted,’” Craig Dunn, Australian Paper’s national manager sustainability, communication and marketing, told Print21.
The company's CEO Peter Williams earlier this year announced a business turnaround plan, saying that changes across all areas of the business would be required for Australia Paper to 'remain viable.'
“This situation has been driven by tough operating conditions and a flood of imported paper from Asia,” said Williams. “We want to see paper production continue in Australia, however, we have now reached a point where without significant improvement to our cost structures, the ongoing competitiveness, and therefore, viability of our operations will be severely tested. We need to restructure our operations and work practices to improve efficiency and productivity; work closely with all our suppliers to reduce input costs; and rebuild our market share and performance.”
Williams said that Australian Paper’s parent company, Nippon Paper Industries (NPI) shared the long-term vision of continuing to manufacture paper in Australia but a turnaround in financial performance was critical.
“The first step involves an organisational restructure of head office to improve efficiency and remove duplication,” he said. “NPI wants to continue investing in Australian Paper and strongly believes we can effectively compete with overseas paper manufacturers, provided we take strong action now to reduce our cost base, rebuild market share for our existing products and capitalise on emerging growth markets such as packaging and recycled office papers. “
“There are also a number of external factors that are impacting our operational viability and must be addressed as part of the turnaround plan. These include access to competitive long term pricing for key manufacturing inputs such as gas, certainty of fibre supply and a strong regulatory response to imports where these products are dumped into the Australian market. We also recognise that the turnaround plan cannot be successful without the full support of our customers. Our business has been founded on long term customer partnerships and the timely supply of high quality Australian made products and our commitment to these principles remains unchanged.”
Australian Paper is the only manufacturer of office, printing and packaging papers in Australia and is one of the largest private employers in Victoria’s Latrobe Valley. The company directly employs 1,250 people and supports nearly 6,000 full time equivalent jobs across its operations.
Earlier this year, Australian Paper announced it was closing its Shoalhaven Mill in NSW, resulting in the loss of 75 jobs. The last roll of paper at the mill was produced on Monday.