THE NORTHERN PULP MILL SALE

After the Aupōuri forest was sold in 1990 to Juken New Zealand (JNL), the NORFED forest owners strove to preserve our original vision to be part of the entire value chain, from owning the land in which the trees grew, through to milling, finishing and marketing the timber and other end products.   

Having failed to purchase the Aupōuri forest ourselves, we then considered purchasing the Northern Pulp Ltd (NPL) mill, which had by then moved into full blown receivership and was on the market.  However, after exhausting every avenue, we could not leverage the necessary money to complete the purchase. So, we decided to meet with JNL which was shaping up to be the likely buyer. 

On the night before our first meeting with JNL, Pētia Welsh, the architect of NORFED, called me and my mother to visit him at Kaitāia hospital.  Clearly unwell, he steadily instructed us for hours on what we were to say and do, and specifically told us that no matter what happened with him, we were not to cancel the meeting. 

The primary goal, he emphasised, was to get JNL to use its clout as forest and mill owner in ways that supported our own vision.  If that was not possible, then our fall-back position was to do whatever it took to minimise the impact of the impending changes on our people.  We left around midnight and awoke to the news that in the early hours of the morning, Pētia had passed away.

Although grieving, we honoured his instructions and held the meeting.  Did we succeed in our primary goal?  No.  Did we succeed in our fall-back position?  Partly. 

With regard to the forest, the huge impact had already occurred in 1988 with corporatisation of Aupōuri forest and the catastrophic loss of more than 130 jobs; so, its privatisation in 1990 had not introduced any further significant change, other than ownership. 

However, with regard to the mill, because only the NPL assets (including our leases) and none of its liabilities would transfer to the new JNL owners, we were to lose the opportunity to take up the 15% shareholding in the mill that had been reserved for us, a major body blow to our vision.

That said, Toshio Nakamoto (JNL President) and his 2IC Tommy (Tomio) Inagaki agreed at the meeting to renegotiate aspects of our leases, like changing the management regimes of parts of our forests from low value pulpwood to higher value pruned logs for export to their Japanese markets. 

Most importantly, they would not only keep the mill open, thus avoiding further job losses for our people, they also planned to expand it. On that basis, we gave our support for their bid.

Within a few weeks of our meeting, and with the support of central and local government leaders, JNL received Overseas Investment Commission consent to purchase the mill for $17.7million. 

Next week I will conclude this brief history of NORFED and the JNL mills in Kaitāia.