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Pulp and paper, aluminium and steel industries

by Megan Cook

New Zealand’s aluminium, steel, and pulp and paper industries were all set up after the Second World War, when the government was eager to diversify the economy. These high-cost, resource-hungry operations employ thousands of New Zealanders and earn big money. All are in the North Island – except the aluminium smelter, which is at Bluff.


Paper: the first attempts

Nineteenth-century settlers made many attempts to make paper, which was needed for newspapers and letters – both essential in the days before telephone, television and radio. Paper was also needed for wrapping and containing items.

The first commercial paper mill was opened by Edward McGlashan in 1876 in Dunedin. It narrowly preceded the Mataura Paper Mill Company, which produced its first paper at its mill in Mataura, Southland, two months later.

Rag robbery

 

Sam Stark, who worked at the Mataura mill from 1878, found useable blankets among the rags bought by his employer, and hid them. When someone else took the blankets from Stark’s hiding place, he complained to the boss. The mill manager gave the illiterate Stark a notice to put up. It told all who could read it, ‘Would the person who stole what Sam Stark stole please return same to avoid trouble.’1

 

Failure

In the early years the Mataura and Dunedin mills failed to produce paper of reasonable quality, or to make a profit.

Fibre is the essential raw material used to make paper. The two mills got their fibre from various combinations of rags, old shipping rope, used sacks, tussock grass, flax and waste paper. But the local population was too small to produce enough waste, and flax and tussock grass proved unsuitable.

Skilled paper-making staff were difficult to find, and the entrepreneurs who set up the mills had little experience in the business. McGlashan, who had struggled for years to establish the Dunedin mill, put it on the market a month after going into production. The Mataura mill did not flourish either, and was sold in 1884 for £5,000, a fifth of what it had cost.

Limited success

Under new owners, both the Mataura and Dunedin mills became profitable by the 1890s, because of skilled staff, new machinery, improved paper quality, and the government’s introduction of protective tariffs from 1888.

This profitability was threatened by competition from cheap imported paper and from the Auckland-based Riverhead Paper Mill Company, which opened in 1900. In 1905, the owners of the three mills agreed to merge, forming New Zealand Paper Mills Ltd (NZPM). NZPM, based at Mataura, was New Zealand’s only commercial paper mill until 1939.

Footnotes
    • John H. Angus, Papermaking pioneers: a history of New Zealand Paper Mills Limited and its predecessors. Mataura: New Zealand Paper Mills, 1976, p. 92. Back

The pulp and paper boom

In the mid-20th century the paper industry boomed, and several new mills opened. There was an abundant supply of raw material from the maturing pine forests planted between the wars. Local and overseas business interest in the pulp and paper industry was strong. The government was committed to industrial development and providing adequate infrastructure. A rapidly expanding economy increased demand for paper products, and difficulties importing pulp and paper during the Second World War made local manufacture desirable.

Canny Scots

 

Scottish entrepreneurs were at the forefront of New Zealand’s 19th- and 20th-century pulp and paper industry. Edward McGlashan, founder of the Dunedin mill, and James Walker Bain, founder of the Mataura mill, were both born in Edinburgh – as was David Henry, who set up the Kinleith mill. James Fletcher, a founder of the Tasman mill, was from Strathclyde.

 

New paper mills

The first of the new mills, at Whakatāne, was set up in 1939. The Second World War slowed further developments, and the other new mills were set up after the war ended. Ownership was spread between local and international private-sector investors and the New Zealand government.

The new mills were:

  • Whakatane Board Mill (1939)
  • Kinleith, near Tokoroa (1953)
  • Penrose, in Auckland (1951)
  • Tamaki, in Auckland (1953)
  • Tasman, at Kawerau (1955)
  • Caxton, at Kawerau (1955).

The major new mills, Kinleith and Tasman, cost a great deal. The Tasman mill complex (including the sawmill) cost £17 million ($765 million in 2008 terms), most of which related to the pulp mill.

By the early 1960s the amount of pulp and paper produced in New Zealand was 16 times greater than in 1945. Pulp and newsprint were exported for the first time.

Wood, power, people

The pulp and paper process uses huge amounts of water, power and raw materials. In the early 1950s, for example, the Kinleith pulp mill’s daily intake was around:

  • 2,000 tonnes of logs
  • 63.6 million litres of water
  • 60 tonnes of coal
  • 200 tonnes of wood waste.

In addition, the mill used 15,000 kilowatts of hydroelectricity annually.

Mill town memories

 

Before moving to Kawerau in 1955, Velma Platt and her friend ‘were real townies. We spent all our leisure time in Queen Street, [and] I lived in Ponsonby and she lived in St Heliers Bay.’ Then their husbands got jobs at the Tasman mill. ‘It was just as though we’d been dropped into the wop-wops … We had a lot of parties. There was nothing else to do! … The company was very definitely involved in the town. We called it Uncle Tas – they really looked after you.’1

 

The cost of building the mills was considerable, so they operated 24 hours a day, seven days a week. The two Kawerau operations alone employed 1,248 people. At first, many of the skilled staff who ran the mills were Scandinavian, Canadian, American or English. By the late 1950s New Zealanders had taken over many of the jobs previously done by overseas staff.

Two company towns, Tokoroa and Kawerau, were set up from scratch to house employees. In both cases, the mill companies were actively involved in running their local town. The populations were male-dominated and relatively young, and families had very high numbers of children. Māori already living in these parts of the country were a significant part of the workforce.

Paper mills in the 2000s

In 2009 there were eight pulp and/or paper mills in production. All were in the North Island (Mataura, the last of the South Island mills, closed in 2000). Ownership was spread amongst local and international investors. The government was no longer a shareholder in any of the mills.

The mills were:

  • Carter Holt Harvey Paperboard, Penrose
  • Carter Holt Harvey Pulp and Paper, Kinleith
  • SCA Hygiene Australasia, Kawerau
  • Carter Holt Harvey, Kawerau
  • Carter Holt Harvey Paperboard, Kawerau
  • Norske Skog, Kawerau
  • Winstone Pulp International, Ohakune
  • Pan Pac Forest Products, Napier.

Environmental impact

Pulp and paper mills have a significant environmental impact through pollution of water and air.

Mill effluent goes into adjacent rivers. It discolours water, and can reduce the amount of oxygen present. Solids in the effluent may coat the riverbed. Chlorine and its derivatives, producing dioxins and other contaminants, may also be present.

As well as looking unsightly, pollution can kill plants and other life in the river. In 1997, Environment Bay of Plenty described life on the bottom of the Tarawera River, used by the Tasman mills, as ‘completely obliterated’.2 The colour of the effluent, which blocked out light, was the greatest problem.

Air pollution has also been an issue. In the mid-1990s, annual emissions from Kawerau mill chimneys included:

  • 11 tonnes of metals, including boron, copper and lead
  • more than 2 tonnes of sulfur gases
  • 1 tonne of dust
  • 900 tonnes of carbon dioxide.

Reducing environmental damage

The mills have reduced their environmental impact by changing production processes, minimising waste and improving treatment of air discharges and effluent.

Many pulp mills have switched from elemental chlorine to chlorine dioxide for bleaching; this reduces the production of harmful organochlorines such as dioxins.

Effluent can now be treated to remove up to 95% of the oxygen-consuming waste.

Footnotes
    • Interview with Velma Platt, August 2008. Back
    • ‘Sides square off over tainted river,’ New Zealand Herald, 28 November 1997. Back

Aluminium

Aluminium, the most common metal in the earth’s crust, is lighter than copper, steel or brass, resists corrosion and readily conducts electricity and heat. It is non-sparking and non-magnetic, and can be recycled indefinitely. When combined with zinc and magnesium, aluminium is stronger than some forms of steel.

Aluminium is only found in ores such as bauxite, combined with other material. Commercially viable methods of extracting alumina (aluminium oxide) from bauxite and then smelting aluminium were discovered in the 1880s.

Aluminium was used in the growing car and electricity industries. Because of its lightness and strength, it was particularly useful in the aircraft industry.

The aluminium industry

By the mid-1890s the world aluminium industry was in full swing. It was dominated by very large companies, operating across national boundaries. The processing needed a plentiful source of bauxite and massive amounts of electricity, and the bauxite refineries and aluminium smelters were expensive to build. The smelters were generally built close to the power source, and alumina was shipped to them.

The industry has always tended to be ‘vertically integrated’: the same company owns or controls the bauxite, the source of power and the refineries and smelters. Rio Tinto Alcan, owner in 2008 of New Zealand’s Tīwai Point aluminium smelter, owns or has interests in:

  • seven bauxite mines and deposits
  • six alumina refineries
  • six specialty alumina plants
  • 26 aluminium smelters
  • 13 power-generating plants, nine of them hydroelectric.

Aluminium in New Zealand

New Zealand’s Bluff aluminium smelter produces the world’s purest aluminium. It is used in mobile phone and computer chips, and, because of its strength and lightness, in very large passenger planes.

The smelter exists because of the country’s hydroelectric capacity. New Zealand has no significant bauxite deposits, and imports the raw materials needed to make aluminium (alumina from Australia, petroleum coke from California, cryolite from Mexico and pitch from Korea).

Failed attempt

 

In the late 1920s, Arctic and Antarctic explorer Sir Douglas Mawson was an enthusiastic participant in early attempts to use Fiordland’s hydroelectric potential. Mawson, an engineer and chemist, tried to interest British, European and American companies in developing the area for aluminium or fertiliser manufacture. He invented a manufacturing process that would allow both substances to be produced at once. Although the companies eventually responded positively, the New Zealand government refused its support.

 

From the early 20th century, New Zealand entrepreneurs saw Fiordland’s potential for hydroelectric generation as an obvious base for industry and profit. Government support was lacking until after the Second World War. The government’s focus was on electrification for domestic and agricultural purposes, and developing the national grid. It did not have the resources to build the large Manapōuri hydroelectric project, and objected to overseas or private control of such an important resource.

Bluff smelter and Manapōuri power scheme

After the Second World War the government’s strong interest in diversifying New Zealand’s economy made an aluminium industry attractive. However, without a reliable source of cheap and abundant electricity, a smelter would not be built. In 1960 the government agreed that Australian firm Consolidated Zinc (ConZinc) could build an aluminium smelter, and develop and use the hydroelectric capacity of Lakes Manapōuri and Te Anau, in Fiordland.

In 1963, ConZinc announced that it could not afford to build the power station, and the New Zealand government took on the project. In 1965 the cost was estimated at £17 million ($34 million) – but the final cost was more than triple that, at around $130 million. The first power was generated in 1969.

ConZinc built the smelter, at Tīwai Point near Bluff, which opened in 1971. It was run by New Zealand Aluminium Smelters (NZAS), a joint venture between ConZinc Rio Tinto and Japanese firms Sumitomo Aluminium and Showa Denko.

In 2006, the smelter produced 350,000 tonnes of aluminium. New Zealand used 13% of this, and the rest was exported, mainly to Japan.

National benefit?

The national benefit from hosting the smelter has been the subject of sometimes heated debate. New Zealand’s contribution, through building the Manapōuri power station and providing low-priced electricity, has been considerable. In the 1970s and 1980s NZAS paid little tax.

Aluminium exports earn tens of millions of dollars (in 2005, $150 million). An NZAS-funded study in 2004 suggested that over half of the company’s earnings would remain in New Zealand through local spending, salaries and taxes. The rest would be spent on imported raw materials or returned to company owners as profit.

Workforce

In 2006, the Tīwai Point smelter employed nearly 1,000 people, many of them from the nearby town of Invercargill. The smelter makes a significant contribution to Southland’s economy. In addition to direct employment, the local port, health services and schools all benefit from the smelter’s existence.

Aramoana smelter proposal

In the late 1970s, a partnership of local and overseas firms proposed building a second aluminium smelter at Aramoana, near Dunedin, and in December 1980 the government announced that the project would go ahead. However, due to vigorous public opposition, shifting international aluminium markets, and the withdrawal of one of the partners, the scheme was eventually dropped.

A separate state

 

Aramoana residents who opposed the smelter formed the Aramoana League, and declared that they had seceded from New Zealand. They set up a border post and began selling ‘passports’ and ‘citizenships’, issued their own stamps, and appointed ‘ambassadors’. They travelled the country campaigning against the smelter, arguing that it would destroy the Aramoana area and be of little benefit to New Zealand.

 

Opposition to smelters

A range of groups opposed the Tīwai Point and Aramoana smelters for environmental, economic and engineering reasons. Lake Manapōuri was to have its level raised as part of the hydroelectricity scheme for Tīwai Point, and saving the lake became the largest conservation issue in New Zealand’s history. Campaigners for open government and against foreign control of New Zealand resources also opposed the smelters.


Steel

Steel is made by combining iron and carbon. It has been fundamental to construction and engineering since the late 19th century, when it replaced iron as the preferred material. Bridges, railway stations, office blocks, hospitals, factory machinery, trains, railway tracks, farming and mining equipment, stoves, household fire grates, kitchen benches and gas fittings all use steel.

Despite New Zealanders’ enthusiastic attempts to smelt and mill steel, there were practical reasons why smelting did not occur before the mid-20th century, and why milling was not always successful.

Steel smelting

Iron was present in New Zealand in two forms: ironsand and limonite. Smelting is the process of extracting iron from a source ore. In the 19th century and first half of the 20th century there were repeated attempts to smelt both ironsand and limonite.

Despite occasional, apparent successes, iron could not be reliably extracted from ironsand. Although limonite could be successfully smelted, the deposits were too small to support a mill.

Iron hero

Euphoria erupted in Te Hēnui, Taranaki, in 1876, when Edward Metcalf Smith and the New Zealand Titanic Steel and Iron Company produced pig iron from the local ironsand. The company’s shares, which had been worthless, rocketed to more than £40. The district held a celebratory dinner for Metcalf Smith, which ended with a band playing ‘See the conquering hero comes’. Unfortunately, no more iron was produced; it was over 80 years before the ironsand puzzle was solved.

Steel milling

Milling is the process of making iron or steel into rods, bars or slabs, which can be easily transported and used by manufacturers. Before the Second World War New Zealand steel millers faced high labour costs, limited technology and a small market. There was also competition from imported steel, which was often of better quality.

Moderately successful from 1886, the Otago Iron Rolling Mills Company (OIRM) was for many years New Zealand’s only steel mill. OIRM used locally sourced iron and steel scrap, and imported steel and pig iron (semi-processed iron ore). During the Second World War OIRM was a strategic industry, providing steel made from scrap when importing was difficult. After the war, the company was dependent on the government for survival. It closed down in 1953.

A local steel industry

The post-war government was committed to the successful development of a steel industry based on New Zealand’s ironsand. It provided technical expertise and funding from the 1940s on, and in the 1950s and early 1960s the problems of using ironsand were resolved.

Private-sector steel milling

In 1959 the government also approved the building of a private-sector ‘merchant bar mill’ which would recycle scrap for subsequent manufacture. Pacific Steel’s mill at Ōtāhuhu, Auckland (a joint venture between Fletchers and Industrial Metals), was up and running by 1963.

By the early 1970s, the Pacific Steel mill was profitably producing almost 100,000 tonnes of steel a year. The mill became New Zealand’s largest metal recycler, using over 280,000 tonnes of scrap annually by the 2000s. It made most of the reinforcing steel and fencing wire used in New Zealand.

Arranged marriage

Fletchers and Industrial Metals were the main contenders for government approval of a merchant mill proposal. Their merger, which formed Pacific Steel, is said to have been suggested by a senior public servant as he did the dishes after a Sunday lunch with senior Fletchers executive George Fraser. Fraser was told that the government would give the go-ahead once the two companies joined forces.

New Zealand Steel

In 1965, with the viability of ironsand processing established, the government set up New Zealand Steel. The company was to develop an ironsand-based steel industry. The government owned 25% of shares in the new company, and the remaining 75% were available for sale.

New Zealand Steel’s Glenbrook mill, costing over $40 million, was built near Waiuku in the Waikato in 1967–69. In late 1969 the mill began using New Zealand ironsand to produce steel.

Government involvement

In the 1980s a major expansion and upgrade of the Glenbrook mill took place. Eventually, and controversially, funded by the government, the work cost $1,959 million. As a result, the government shareholding in New Zealand Steel increased to 89%. That shareholding was sold to private interests for $300 million in 1987. The company is now owned by BlueScope Steel (formerly BHP Australia).

In 2008 the Glenbrook steel mill produced steel used in the building, agricultural and automotive industries. Half of its annual output of 620,000 tonnes was exported, contributing over $2 billion a year to the New Zealand economy. With 1,500 workers, Glenbrook was the largest single employment site in New Zealand.

Environmental impact

The Glenbrook and Pacific Steel mills have been among the largest emitters of air pollution in New Zealand. They produce hundreds of thousands of tonnes of solid waste each year, and use over a million tonnes of water each day.


External links and sources

More suggestions and sources


How to cite this page: Megan Cook, 'Pulp and paper, aluminium and steel industries', Te Ara - the Encyclopedia of New Zealand, http://www.TeAra.govt.nz/en/pulp-and-paper-aluminium-and-steel-industries/print (accessed 18 November 2019)

Story by Megan Cook, published 11 Mar 2010