Gunns downgrades its proposed pulp mill project in Bell Bay, Tasmania, from 'probable to proceed,' says it has less confidence in its 'ability to influence the mill project proceeding'

Sandy Yang

Sandy Yang

Aug 8, 2012 – Industry Intelligence Inc.

LOS ANGELES , August 7, 2012 () –

In a surprising move, Gunns Ltd. has lowered its expectations that its proposed AU$2.3 billion (US$2.43 billion) pulp mill project in Bell Bay, Tasmania, will proceed, reported The Sydney Morning Herald on Aug. 7.

The Launceston, Tasmania-based forestry company announced on Aug. 6 that its board had decided to no longer list the Tamar Valley project as “probably to proceed,” because it had to adjust its accounts.

The project might still go ahead, but Gunns has “decreased confidence…that it has the ability to influence the mill project proceeding,” the company stated, The Sydney Morning Herald reported.

If the project does not go forward, “it’s important that we turn our minds to alternatives,” said Terry Edwards, CEO of the Forest Industries Assn. of Tasmania, noting that the state needs the employment and the investment.

Edwards also has a central role in the forest peace negotiations that are struggling to reach a settlement after two years and are now attempting what one negotiator called a “last hurrah,” reported The Sydney Morning Herald.

Timber workers who have lost their jobs as Gunns shifted out of native forests to what was to be a plantation-based pulp mill would benefit not only from the Bell Bay mill proceeding but also from a successful conclusion to the forest peace talks.

The government has offered an AU$276-million package to mainly assist the displaced forestry workers. Tasmania has struggled to adjust to the decline in demand for native forest woodchips once consumed by Gunns, The Sydney Morning Herald reported.

In the eight years since the Bell Bay pulp mill was first proposed, it has failed to find a backer and remains unfinanced. Gunns has been steadfastly optimistic about the project’s prospects despite the various hurdles and setbacks, until now.

Premier Lara Giddings would only concede that the project looked like it might be “a bit further away,” rather than believing it had been written off.

Green leader Christine Milne, however, thought that the company’s announcement was an admission that its business model is “non-viable.” “There is no life left in the beast,” she said, reported The Sydney Morning Herald.

The primary source of this article is The Sydney Morning Herald, Sydney, Australia, on Aug. 7, 2012.


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