Nippon Paper subsidiary South East Fibre Exports will not renew agreement to buy timber from state forests in Victoria, Australia, amounting to about half of woodchip exporter's supply; loss of AU$12M/year contract will squeeze state-owned VicForests

MELBOURNE, Australia , May 13, 2014 () – THE future of Victoria’s taxpayer-owned logging company is in serious doubt after one of its biggest customers announced it would no longer buy timber from the state’s forests in East Gippsland.

South East Fibre Exports, a wholly-owned subsidiary of Japanese paper giant Nippon Paper, said it would not enter into a new agreement with VicForests when its current contract expired.

The contract was believed to be worth about $12 million annually with SEFE taking about half of its supply from VicForests.

Industry sources say the ­decision could spell an end for native forest clearing in East Gippsland and put further pressure on the state-owned logging company which has continued to receive government subsidies, despite failing to pay a dividend for more than five years.

Farmers continue to put pressure on the State Government to stop logging in the Yarra Valley catchments due to reduced water supplies.

VicForests’ chief Robert Green said despite SEFE’s decision affecting the market for residual timber produced from harvesting operations, the industry in East Gippsland would continue.

“The challenge in front of us now is to build a different ­future for the timber industry in East Gippsland, which continues to provide jobs and economic benefits to the region but may not include export woodchips,” he said.

Victorian Greens leader Greg Barber said the State Government should stop logging native forests instead of subsidising it.

“VicForests is a loss-making public-owned company and now it is absolutely finished,” Mr Barber said.

“No one wants to buy their product and they can’t make any money off it.” Environment East Gippsland co-ordinator Jill Redwood said woodchipping had been an economic drain.

“The Government should now manage our public forests for public good not for private profit,” Ms Redwood said.

annika.smethurst@news.com.au

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