Circulations and paging may be down, but that hasn’t stopped Australia’s two biggest newspaper groups from handing out a billion-dollar Christmas present.
That’s the value of newsprint and improved grades to be supplied by Norske Skog to News Limited and Fairfax Media in the term of new supply agreements. $1.6 billion –$1634913000.00, or NOK 9 billion if you prefer – is the estimated value of the new agreements set to run until mid-2020.
Both were due to expire in June 2015.
Norske Skog has been both companies’ major supplier since the company acquired the Albury, NSW, mill – of which both were owners – and before, with security of supply and demand and stable pricing seen as the main benefits.
Norske Skog chief executive Sven Ombudstvedt says the “very important agreement” confirms Norske Skog’s position as preferred supplier. “These agreements gives us the opportunity to cooperate closely with these customers and thus, intensify the effort to reduce costs in the value chain," he says.
Regional president Andrew Leighton says the manufacturer has worked separately with both News and Fairfax during 2013 to develop “mutually beneficial” agreements that secure Norske Skog's the business beyond 2015.
Ombudstvedt says market share are secured in Australia and New Zealand until 2020, and future foreign exchange rate exposure is also limited by the agreements.
In 2013 News and Fairfax 70 per cent of the newsprint and improved grade market in Australasia. Norske Skog has mills at Albury, Boyer (Tasmania) and Tasman (New Zealand), with a total production capacity of 700,000 tonnes.