The Government says there's little point trying to save jobs at the threatened Tasman pulp and paper mill in Kawerau, but it's looking at ways to create new opportunities in the region.
The mill's owner, paper giant Norske Skog, announced on Monday it will permanently close one of its newsprint machines, cutting production by 150,000 tonnes and threatening the loss of more than 100 jobs.
Norske Skog chief executive Sven Ombudstvedt says there's an oversupply of newsprint in the Australasian region, but the company plans to maintain production in Australia.
Facing pressure to save the mill, Business, Innovation and Employment Minister Steven Joyce says there's no sense in putting money into a declining industry.
"The reason it's a declining industry is, people carry them around every day - smartphones, iPads, all those things," he told Radio New Zealand.
The Government is considering a primary growth partnership with Norske Skog to create new jobs in "sunrise technology" in Kawerau.
"They're very pleased with their involvement with Kawerau, they love the place, it's got some wonderful resources - geothermal, the access to the timber resource, obviously - and they are making investments," Mr Joyce said.
"They're very keen to retain their base in Kawerau because that's where that resource [is] and they're sitting on a geothermal reservoir there, which is fantastic for them, so there's lot of pluses."
He said Norske Skog was "very keen to grow their investment in biofuels", so the job losses were "not a one-way story".
The company's website says the mill employs 361 people.
It supplies all of New Zealand's newsprint and telephone directory requirements and also provides about 30 percent of Australia's newsprint needs.
The company also announced it will invest AU$84 million (NZ$108m) to covert a machine at its Boyer mill in Tasmania to coated grade paper, with financial help from the federal and state governments.
However, Mr Joyce says he does not believe subsidies from the Australian government are a major factor in Norske Skog's decision, as the Australian mills are nearer to the centres requiring newsprint.
NZN