Background of withdrawal from the business Opal manufactures and sells paperboard, kraft paper, graphic paper, corrugated board, and folding cartons in Australia and New Zealand.
Opal’s Maryvale Mill in Victoria, Australia (MV Mill), one of Opal’s manufacturing sites, manufactures and sells graphic paper, paperboard, and kraft paper. MV Mill had sourced eucalyptus wood produced in Victoria’s state owned forests as the raw material for bleached pulp, the main ingredient of graphic paper, from VicForests (VF), a Victorian state-owned forestry business.
VF had been contesting a combined court case involving the Environment East Gippsland and Kinglake Friends of the Forest environmental groups since 2021 regarding its timber harvesting activities. On 11 November 2022, the Supreme Court of Victoria, Australia, issued orders against VF which impacted VF ability to continue its timber harvesting operations, making it impossible for Opal to procure eucalyptus wood from VF.
In response to this sudden and unexpected suspension of supply, the Company and Opal has been considering alternative wood suppliesin order to continue graphic paper operations, but has concluded that alternative procurement is not feasible and has decided to discontinue the graphic paper business at the MV Mill (permanent suspension of some manufacturing assets).
In connection with the withdrawal from the graphic paper business at the MV Mill, the Company expects to record approximately 20 billion JPY in FY2023/3 as an impairment loss on fixed assets, etc. With the withdrawal from the graphic paper business, Opal will focus on the packaging business, which is expected to grow in the future, and will strengthen its integrated packaging supply strategy in Oceania by transitioning the MV Mill into a sustainable packaging paper mill. Please refer to the “Nippon Paper Announces to Record Extraordinary Income and to Revise the Projection of the Consolidated Financial Results” separately disclosed today for the consolidated earnings forecast for FY2023/3.