The Government will provide up to $60 million to Fletcher Building’s Golden Bay Cement to secure New Zealand’s only domestic cement manufacturing operation, with Fletcher Building committing at least $150 million to keep the Whangārei plant operating until at least 2040.
The agreement follows concerns that rising costs, particularly carbon costs, could have forced Golden Bay Cement to close its clinker manufacturing operation and transition to an import-only model from 2030.
Finance and Economic Growth Minister Nicola Willis says the Government has determined domestic cement production is strategically important to New Zealand’s economy and supply chain resilience.
“We have agreed to grant Golden Bay Cement up to $60m to continue cement manufacturing at its Whangārei plant, maintain domestic clinker manufacturing capability, and undertake at least $150m in investments needed to support cost-effective domestic cement production through to at least 2040.”
Willis says Cabinet carefully considered the case for targeted, time-limited financial support after being advised Fletcher Building was considering closing the clinker facility because of rising costs.
“The Golden Bay factory is New Zealand’s only fully integrated cement manufacturing plant and plays a vital role in our economic supply chain,” she says.
“Losing domestic cement production would leave us massively exposed to potential global supply disruptions. Cement has no practical substitutes. It is needed for the building of homes, hospitals, schools, roads, and other nationally significant infrastructure.”
Golden Bay Cement operates the Portland plant near Whangārei, supplying almost 60% of New Zealand’s cement requirements, with around 95% of its production sold domestically. The company is also one of Northland’s largest private employers.
According to NZX-listed Fletcher Building, an independent assessment found that without Government support, increasing costs – particularly emissions costs not faced to the same extent by overseas cement importers – would likely force the plant to close from 2030 in favour of importing cement.
Under the agreement, Golden Bay Cement has committed to continue manufacturing cement in New Zealand until at least December 31, 2040, while investing a minimum of $150m in operations, optimisation, resilience and decarbonisation initiatives at the Northland site. The investment programme will be phased over time and remain subject to Fletcher Building’s normal capital approval processes.
The Government says the agreement also requires Golden Bay Cement to maintain domestic clinker manufacturing capability, preserve jobs, and comply with additional reporting and auditing requirements. Funding can be clawed back if the company fails to meet its obligations.
Willis says the Government commissioned an independent open-book financial assessment before reaching its decision.
The review concluded that domestic cement production faced significant financial constraints, primarily because of emissions costs.
While alternative forms of regulatory relief were considered, Willis says the Government opted for direct financial support to avoid undermining the integrity of the Emissions Trading Scheme.
Fletcher Building chief executive Andrew Reding says retaining domestic cement production is critical for both economic and national resilience.
“Domestic cement production matters for New Zealand’s resilience as much as for its economics. An onshore source reduces exposure to shipping disruption, supply shocks and price volatility, an increasingly important consideration as global supply chains become more unpredictable.
“Golden Bay Cement directly employs more than 150 people and supports a further 450 jobs across the Whangārei district, underpinning our ability to build homes, hospitals, roads and infrastructure with locally sourced materials.
“Without Government support, increasing costs, including carbon emission costs that our competitors importing cement from overseas do not currently incur at the same level, would likely have required us to close the plant and move to an import-only model from 2030.
“This agreement removes that risk, providing the certainty to keep investing in domestic manufacturing, operational resilience and lower-carbon production. It’s a strong example of business and Government working together in the national interest.”
Golden Bay Cement says it has invested heavily in modernisation upgrades and alternative fuels to remove fossil fuels from its manufacturing process, meaning the domestic cement supply secured under the agreement has a lower carbon footprint than the imported cement it would otherwise be replaced with.
Willis says the agreement is an exceptional, one-off response to preserve a strategically significant manufacturing capability.
“Our Government did not take this decision lightly,” she says.
“In an uncertain world, the Government has acted to secure New Zealand’s national economic resilience.”
