Red Stag Timber is spending $60 million to expand its Waipa Sawmill in Rotorua into a ‘supermill’ and says there'll be further investment if the government uses more wood in its buildings.

The former state-owned mill sold from receivership for $1 in 2003 and currently employs about 330 people.

Owner Marty Verry says $65m-$70m has been invested since then and stage one of the new plan will add a ‘front-end’, which long-term will provide fewer jobs but potentially higher paid ones.

The new mill on the existing Waipa site being built by US firm USNR will have an annual log input capacity of 1,2 million tons running on two shifts. Supermills can process more than a million logs a year. "We're going to be building a completely new sawmilling line alongside our existing operation," Verry told NZ Newswire.

The project will be funded internally by Red Stag Group. Verry says only a small amount of debt will be needed.

At the end of stage one in 2016 the mill will still employ more than 300 people and will be the largest in the southern hemisphere. "What people should be thinking is fewer high paid jobs are better," Verry said. There will be more productivity per employee and the skills required will be higher.

The group also has a property development business in Christchurch where Verry is arguing the merits of wood as a building product after the earthquakes. "Some projects are uneconomic in Christchurch because of foundation and ground work. That's lessened by having a lighter building above," he said.

Verry says 25 sawmills have closed since his family purchased Red Stag. "It's an industry that's changing. There are fewer operators but they have to get bigger to compete domestically and internationally and against other materials," he said. “Mills had to stay on a technology growth pathway,” he added.

Red Stag wants to have 40 percent of the New Zealand structural timber market, from 25 percent currently and predicts its investment may help timber prices to fall by 10 percent.

The company will invest another $60m if the government adopts a wood-first procurement policy. The idea proposed by the industry has been picked up by Labour.

Verry says some government back benchers support it but the industry still "has to get the front bench over the line".

The Verry family once put together Black Horse Holdings Consortium to try to buy National Bank of New Zealand when it was being sold by Lloyds. They have been critics of the way monetary policy has been managed in New Zealand.

Source: NZ Newswire (Edited)

Log loader at Red Stag Timber