Norske Skog Tasman: building a sustainable, competitive future in New Zealand
July 2008
By Rob Ryan
Rising costs, overcapacity and pressure to improve energy efficiency … papermakers in North America and Europe are very familiar with these issues and challenges. Added to that, papermakers around the world are under increasing pressure to reduce the ecological footprint of their operations, in response to concerns about climate change.
The same is true in New Zealand, where the paper industry faces these challenges and more. Papermakers in this remote South Pacific nation also have to struggle with the small size of their domestic markets and the need to find customers overseas.
But New Zealand is a blessed nation as well, in terms of natural resources. More specifically, it has excellent conditions for plantations and unusual geothermal potential. This article outlines how a top European papermaker is building a solid future down under based on investments in upgraded capacity and productivity improvements – and intelligent harnessing of New Zealand’s natural assets.
The papermaker is Norske Skog – the Norwegian based global newsprint manufacturer. The newsprint producer made its strategic move down under in 2000, when it bought up the Tasman mill in Kawerau, in New Zealand’s North Island, plus two mills in nearby Australia from Fletcher Challenge. The investment gave the company 945,000 tonnes/yr of capacity in the two countries. In 2001, Norske Skog sold off the bleached kraft pulp line at Tasman to Carter Holt Harvey, and the two separately-owned manufacturers share the mill site.
Major modernization
In 2005, Norske Skog Australasia (NSA) embarked on the “Project 315K” modernization of the Tasman mill. The work was designed to overhaul the operations that the Norwegian newsprint giant had acquired five years previously. The project was part of a NOK 130 million ($25 million) upgrade over three years.
Project 315K kicked off with a rebuild of PM 3 in June 2005. PM 3 is a 7.4 m wide (wire width) machine originally installed in 1975. The machine had previously been upgraded in 1985, when Metso installed a Symflow head box and Symformer forming section on the machine.
The Project 315K rebuild involved major work on the press section of PM 3, including rolls upgrade and a revamp to hydraulic loading. The dryer section also received attention: Voith rebuilt the first and section dryer groups and installed duo stabilizers on the two groups. The successful completion of the rebuild brought an increase in operating speed for the paper machine, to 1,150 m/min (up from 1,050 m/min).
After the rebuild of PM 3 in June 2005, the focus of Project 315K shifted to the older PM 2. This machine, which is also 7.4 m wide at the wire, had originally started up in 1965. The machine’s calender stack had previously been upgraded in the 1980s, and PM 2 received a Symformer from Metso in 1988. The paper machine was later fitted with a dilution control headbox from Voith in 2003.
The Project 315K work on PM 2 was carried out during a 22 day shut in June 2006. The work comprised upgrading the former section and installation of new drainage foils, and an overhaul of the press section. Work was carried out on the dryer section to improve the stability of the sheet and dryer threading. The rebuild boosted the operating speed of PM 2 to 1,150 m/min (up from 1,050 m/min).
The successful completion of Project 315K saw the combined capacity of the two machines boosted by 30,000 tonnes/yr to 317,000 tonnes/yr, says general manager Ernie Hacker. This new capacity figure just exceeds the targeted 315,000 tonnes – which explains the meaning of “315” in Project 315K.
Productivity boost
The completion of Project 315K and the achievement of the targeted capacity boost on the two newest machines was a milestone for the Tasman mill. But this was a sad time as well, as it meant the planned retirement of the 50-year-old PM 1 could proceed as scheduled. PM 1 made its last newsprint on July 31, 2006 – and the end was witnessed by some operators who had worked on the machine for 40 years and more. Tasman management also went ahead with the closure of the mill’s underutilized stone groundwood line and the Wood Preparation Plant in 2006.
While the PM 1 closure was sad for operators with long careers at Tasman, it was an inevitable part of progress towards improved productivity and international competitiveness. Engineering manager Mike Gommans says that PM 1 was “at the end of its economic life”. He describes the closure as helping “to ensure the sustainability of the mill, by continuing to operate efficiently”.
Improving competitiveness through such major modernizations as Project 315K is an ongoing priority for the management of the Tasman mill. Another project that Norske Skog has undertaken in recent times that is designed to improve competitiveness is its investment in streamlined warehousing and distribution. Reels are now packed into containers on-site, instead of at Mount Maunganui. “The investment cuts out double handling at the port of Mount Maunganui,” says Hacker.
Geothermal power
As mentioned above, global warming and the search for environmentally-friendly sources of energy has captured the attention of industry leaders and governments around the world. Fortunately, some parts of New Zealand are blessed with geothermal resources as mentioned previously. This gives the nation the means to generate clean and green electricity to power homes and industry.
The Tasman mill is in an ideal location to make use of this natural resource, as it sits directly above a geothermal basin. And it will shortly begin to take advantage of this fact. In October this year, Mighty River Power will start up the Kawerau Geothermal Power Station adjacent to the Tasman mill, and the utility will begin supplying the mill with geothermal generated electricity from the new $NZ300 million ($225 million) power station.
“Kawerau Geothermal Power Station is designed to generate base load power,” says Mighty River Power Kawerau operations manager Brent Hamblyn. This is not the case for other forms of renewable energy sources such as wind and hydro, which are dependent on climate variations and therefore not suited to the base load sector. Mighty River has drilled 2.5 km deep wells into the geothermal reservoirs that lie beneath Kawerau. Steam from these wells will drive a turbine, which will in turn drive the generator to produce electricity. Spent water from the process will be reinjected into the subterranean reservoirs.
Norske Skog does not hold any equity stake in the Kawerau Geothermal Power Station; Mighty River is a government-owned power utility. But the Tasman mill has a major stake in the new power station: it has agreed to take 72 MW of its 90 MW capacity. And some of the wells are in fact located within the Tasman mill site. “The geothermal power station will provide us with security and certainty of supply,” says Hacker.
Energy is a major focus for the management of the Tasman mill, because the cost of power supplied by the grid is subject to wild swings depending on the time of day spot market. Electricity from the grid can cost as much as $NZ300 ($225) a MW in peak times, and then fall to as little as $NZ50 ($37.50) a MW when demand is low.
Power costs are a particularly important concern in operating the mill’s thermo mechanical pulp and refiner mechanical pulp lines. A skilled team of operators continually watches and predicts the price of power from the grid, and adjusts production of RMP and TMP accordingly. The mill makes full use of low power demand times to maximize the energy-intensive output of these pulp grades, according to Hillary Kearns, manager, pulp, energy and effluent. “Energy is a critical issue,” says Hacker.
Sustainable fiber resources
Apart from novel subterranean resources, the Bay of Plenty area that the mill is located in has plenty of resources above ground as well – that is, sustainable and highly productive radiata pine plantations, some of these plantations are in their third rotation and producing more wood than ever. There are approximately 440,000 ha of radiata plantations in the region some of which were originally established during the 1920s and 1930s.
Norske Skog does not own any forests but enters into long term contracts with local saw millers and forest owners to secure the fiber required. About three-quarters of the fiber needs are met with sawmill chip (off cuts and unwanted lumber from the manufacturing process which is chipped) which provides the strength. The remaining quarter is thinnings and tops of logs from the harvesting operations.
Two joint ventures established by the two companies handle the shared services at the site – water and waste management; stores, and power and steam generation.
Offshore markets
New Zealanders have a keen interest in current events and sporting news, and there is diversity of print media serving readers’ interests through the nation. However the domestic population of just four million is too small to support a world scale paper mill like Tasman. Indeed New Zealand consumes only about 140,000 tonnes/yr of newsprint, which is way too small a market even for this sole national producer of the grade. So the mill relies heavily on offshore markets.
“We export about half of our output,” says Hacker. Australia is the main export market, and it counts the two leading Australian newspaper publishers – Rupert Murdoch’s News Limited and Fairfax Media – among its chief customers.
Back home in New Zealand, Norske Skog’s customers include such quality mastheads as The Dominion Post and The New Zealand Herald. Tasman’s brands include Nornews standard newsprint, Norbright and Directory grades. It also produces Stratus enhanced high brightness grade, which includes up to 35% bleached radiata kraft pulp in the furnish.
Challenges and blessings
As outlined previously, New Zealand papermakers certainly face some key challenges. Nevertheless it is possible to meet these challenges, as Norske Skog has shown through investing in ongoing improvements, and to build internationally competitive, sustainable operations in this distant South Pacific nation.
New Zealand papermakers may be only comparatively small players in the worldwide paper industry. But its paper industry has proved that it can play in the same sandpit as the big boys, and do so in a sustainable manner as well.
And this nation is the right place to make newsprint and other grades of paper. “New Zealand is blessed with steam, water, power, fiber, labor and know how. There are not too many countries around the world like that,” says Hacker.
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