Tasmanian logging company Gunns now doubts its $3 billion pulp mill, planned for the Tamar Valley, will ever be built.
The company told the Australian Securities Exchange on August 6 that its debts were somewhere between $50 million and $150 million. It said the steep decline in the price of woodchips and the high Australian dollar were to blame for its financial woes. Gunns said this meant the “board has been unable to reach a view” that the pulp mill project could go ahead.
To pay off its debts and attract new investors to help build the mill, Gunns has sold off its plantations and woodchip mills assets over the past two years. In March, Gunns requested its shares be suspended from trading after an overseas investor pulled out of the project. Its share price is frozen at 16 cents and some financial analysts have speculated that the company could soon be put into receivership.
The project has been one of the state’s most divisive political issues. For eight years, residents from the Tamar Valley, near Launceston, have campaigned to stop the planned mill because of its environmental, health and economic impacts.
The Tasmanian Conservation Trust is involved in a court battle with Gunns, arguing that construction permits for the mill should have expired as the company had not fulfilled a key permit condition to start substantial work by August last year.
As Tasmania’s logging industry has declined, representatives from the industry, government and environment groups have held negotiations about its future.
Dubbed the forest “peace agreements”, environment groups Environment Tasmania, The Wilderness Society and the Australian Conservation Foundation have pushed for an end to logging in Tasmania’s native forests. The logging companies want an end to the ongoing protests that have taken place for decades, but have signalled they are also happy to be paid to exit the industry.
The federal government has already granted a $45 million payout to companies who wind up their operations.
However, the latest round of negotiations failed to reach an agreement by their deadline on August 7.
The state government promised environment groups that many long-contested high conservation value forests, totalling 430,000 hectares, would be given full protection, however a sticking point for the industry is that this outcome would mean existing logging contracts could not be fulfilled.
In a protest against the broken promise to protect these forests, activist Miranda Gibson has lived in a 60 metre-tall “Observer Tree" in one of the threatened forests for the past eight months. She has now broken the Australian record for the longest tree-sit and has promised to remain there until the forest has been protected.