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Norske Skog to Invest A$160 Million in Australasia

Norske Skogindustrier ASA, the world's second-largest newsprint maker, will spend A$160 million ($110 million) to revamp mills in Australia and New Zealand.

Norske Skogindustrier ASA, the world's second-largest newsprint maker, will spend A$160 million ($110 million) to revamp mills in Australia and New Zealand.

The company will shut one paper mill at its Tasman plant in New Zealand while refurbish two others, the Lysaker, Norway- based company said in a statement. It aims to reduce annual costs by A$30 million and boost operating margin before deprecation and amortization by 3 to 4 percentage points.

Norske Skog is the sole producer of newsprint and magazine paper in the region, which consumes 1.2 million metric tons of those products. The project should also reduce transportation costs as the rebuilding of a machine in Albury, located in Australia's New South Wales state, will increase capacity by 50,000 tons that is currently produced in New Zealand.

``This project shows our commitment to our customers and our business in the region as it will further enhance our product quality,'' said Jan Oksum, 54, chief executive of Norske Skog, in the statement. ``Furthermore , it will significantly reduce the cost level in the region.''

Norske Skog also will book a charge of 230 million kroner ($33 million) this quarter from the closure of the mill and related to unspecific job cuts.

The shares rose 0.75 krone to 115.75 kroner on Friday. They have lost 8.9 percent this year, valuing Norske Skog at 15.4 billion kroner.

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