Winstone Pulp International has changed its mind about closing its Prime sawmill in Gisborne.
Last week the wood processing company announced the mill, which produces kiln dried lumber for export, would shut and 65 people would lose their jobs.
Following a series of meetings with staff, wood suppliers and customers managing director David Anderson says a decision has been made to keep the mill open on a reduced basis.
Mr Anderson says production will continue with a staff of 20 people. However, the mill still faces serious challenges and the operation will be constantly monitored.
The union representing workers at the sawmill welcomes the decision to keep the plant open on a reduced scale.
Colleen Ryan, of the National Distribution Union, says it is a great outcome, although there were mixed emotions at the meeting of staff on Monday.
Ms Ryan says the company handed out redundancy packages to the 45 workers who will be laid off in four weeks.
