Winstone Pulp International chief executive Mike Ryan has confirmed the company will shut down because there were no options available to stay open.
About 230 jobs will be lost.
In a statement Ryan blamed high wholesale power prices and low market prices for forestry products.
“This was not a decision taken lightly. We gave due consideration to the feedback and alternatives put forward by staff and unions…
“There were a number of good ideas put forward that would make incremental improvements to our operations, but not enough to offset the dual impacts of internationally uncompetitive energy prices in New Zealand, and the relatively low current and forecast market prices for pulp and timber.”
Ryan said although power prices had dropped since the spike last month, the change was not big enough to make a difference long term.
“The current New Zealand cost base means that we are no longer internationally competitive. This is a problem that WPI shares with many other companies that form New Zealand’s industrial base.”
He thanked staff, community and government officials for their efforts in trying to save the mills and said all staff would receive full redundancy entitlements.
Ruapehu District Mayor Weston Kirton said it was a massive blow to the community, and his immediate concern was the people affected.
For the past few weeks Winstone had been meeting with energy company Mercury and government ministers to try and find a way to stay open.
A petition was launched last week to save the mill, fearing nearby communities would turn into ghost towns, Winstone being the main employer in the area.
Winstone Pulp electrician and union delegate Daniel Abernathy told Morning Report earlier on Tuesday there was a “bit of hope” a deal could be made with the government so the mills could stay open.
Abernathy said the company had responded positively to the 189 submissions staff made to improve the mill and cut down on costs. He said staff had been working hard to make sure the mills were in the best condition, should they remain open.
Resources Minister Shane Jones has threatened to end the Electricity Authority if it did not work harder to regulate power prices, but the government was yet to intervene on the issue.
