This is a briefing paper on the current debate over the future of Tasmanian forestry and Gunns’ planned pulp mill prepared by TAP Into A Better Tasmania, November 2010. A pdf is available for downloading from below.

For further information please contact media spokesman Robert McMahon on 0448 547 290 or email bob@orielstudio.com.au

Introduction

A stalled proposal for a world scale pulp mill, the slow motion collapse of the forest industry, the astonishing alignment of environmental groups behind industry for a plantation-based pulp mill and the prospect of big money changing hands marks an extraordinary period in a small island’s history.

So how did all this happen? It’s time to examine the causes in detail because to misdiagnose the causes invites the wrong solution. One solution being proposed, for example, involves ‘compensating’ the forest industry to the tune of over a billion dollars. But that in turn carries its own serious consequences eg. lack of funding for public hospitals.

The interpretation of the causes presented here provides a big picture perspective from a hitherto ignored community view, the one that the special interest groups involved don’t want to hear.

So how did we arrive at the point where the aims of some environment groups now mesh with industry, where conservationists signed up to support a plantation industry and a pulp mill in Tasmania, and the community was sidelined?

The story started decades ago.

Introduction

CEO of Gunns Ltd, Greg L’Estrange told ABC Stateline (25.10.10) that Gunns would work “with the community so they understood what the pulp mill facility planned for the Tamar Valley is”.

We don’t feel confident that he will explain why his pulp mill will stink as do all others of this type around the world. So TAP Into A Better Tasmania has followed the foul odour trail through leaked letters, restricted terms of reference and incomplete reports to produce this Odour Advisory. It tells the story that Greg L’Estrange won’t and why it is a significant risk for business and health of the 100 000 people who live in the Tamar Valley.

The assessment of this issue carried out to date has looked only at odour from the stack, and not at odour which after about twelve months starts to leak from thousands of pipe seals and other leakage points. These fugitive emissions pose the biggest threat to your business, as they make up 98% of the odour escaping from pulp mills, including the most modern ones.

The Resource Planning and Development Commission (RPDC), which was initially given the task of assessing Gunns’ proposal, determined that the odour zone would have a radius of 55k around the Long Reach site. This odour will affect all wineries, tourist operators and other businesses in the zone; Tamar Ridge is of course only 5km from the site and will be one of the businesses worst affected.

This poses serious political, financial and project risks for potential joint venture partners and business investors alike. If a financial backer can be found, only one more regulatory hurdle (permit for marine discharge into Commonwealth waters in Bass Strait) has to be cleared before construction may begin.

The history of the failed assessment of odour is summarised in the next few paragraphs.

First published on Tasmanian Times

The Truth and Reconciliation Roadshow continued last week with a presentation by Gunns’ CEO to a conference run by investment bank UBS, coincidentally a Gunns’ shareholder.

The changes from the presentation which accompanied the release of Gunns’ preliminary 2010 financials in mid August were subtle and revealing of the future chosen path.

John Gay’s business model was then described as being “a conglomerate of long life low yielding assets…..(consisting of) many businesses….. excessive levels of encumbered assets .....excessive debt levels to earnings,..... (where) potential investors do not understand the business.”

The latest presentation includes further criticisms of the old model. Mr L’Estrange confirmed that Gunns was “cash negative” and was bedevilled by “aging inefficient assets”.

Cash negativity is a fairly serious condition. If it persists disaster usually awaits. Aging inefficient assets make the problem worse. Forget about a social license. Gunns needs cash and a more ‘efficient’ portfolio of assets.

In August the new look Gunns was to comprise a division devoted to ‘hardwood and softwood’ sawmilling.

This has now been revised to ‘softwood processing’ only. No mention of hardwood sawmilling. Literally, this means an exit from all hardwood sawmilling not just native forest sawmilling.

Normally a CEO when spruiking his Company will attempt to explain and justify the latest P&L Statement. UBS has been critical in the past of the book entries of Dickensian proportions that have been used to prepare Gunns’ financial accounts. Hence Greg didn’t dwell on Gunns’ appalling 2010 results. He was on a hiding to nothing. He simply said “if your investment focus is purely about this year’s trading, GNS is not your stock”.

Never a truer word has been uttered.

By John Lawrence

First published 07.10.10 on Tasmanian Times

The forest industry’s slow motion train wreck continues its inexorable journey.

There are many, on both sides of the forest debate who appear to accept the urban myth that had it not been for the actions of high profile activists, Gunns’ former CEO would still be ensconced in Lindsay St Launceston.

A quick glance at the ASX announcement on 16th August 2010 outlining Gunns’ achievements in the financial year 2010 reveal that Gunns’ old business plan was a failure. The company’s old model was described as being “a conglomerate of long life low yielding assets…..(consisting of) many businesses….. excessive levels of encumbered assets .....excessive debt levels to earnings,..... (where) potential investors do not understand the business.”

It took the new Board less than 3 months to clearfell the legacy of Miranda Devine’s Working Class Hero (Devine retribution ... John Gay: working class hero and The Devine lie.)

The CEO’s demise and the uncertain state of his former bailiwick are due to its flawed business model, not the actions of one or two of its opponents.

There’s a real danger that erroneous reasons for the predicament facing the forest industry will lead to erroneous recommendations for a way forward.

Whatever the outcome of the Roundtable the next step will require heaps of money. From taxpayers probably. So an understanding of the current situation from a $ viewpoint must surely be close to the top of the list of current priorities.

By  Mike Bolan. Published 22 June 2010 on www.tasmaniantimes.com

If someone wanted to damage you, your property, your lifestyle, your future and/or your business how would you feel about it if they also expected you to pay them to cause the damage?

Unenthusiastic? Hostile?

That’s basically why so many Tasmanians oppose forestry as it’s conducted here.

Gunns Ltd continues to pursue its goal of a very large chemical pulp mill in the Tamar Valley.

You are invited to register your interest in being part of a potential class action seeking compensation for damages arising from Gunns Ltd planned pulp mill should it be built.

Tasmanians Against the Pulp Mill (TAP) has initiated the register to collate details of interested parties and to determine the extent of possible damages to the community and businesses if the proposed pulp mill proceeds.

The next TAP public forum in the series will be on alternative futures for our forests.

When 7pm - 9.45pm Monday 25 February 2008.

Where Riverside Community Centre, off Brownfields Lane behind the Riverside High School, West Tamar High way, Launceston.

Speakers
Speakers
Mike Scott (engineer) email - Mike_Scott@acl.com.au
Frank Strie (master forester) email - schwabenforest@connect.net.au
Kim Booth (Greens MHA) email - kim.booth@parliament.tas.gov.au

Decisions by Forestry Tasmania about the State's forests centre on producing one main low value product – pulp wood, but at what cost?

The Tasmanian Government has not investigated the financial risks of the mill to the State and documented the subsidies. The economic viability of the pulp mill has not been tested in public.

The financial risks arising from the proposed pulp mill could have a significant impact on all players involved, foreign bankers, land owners, the public, local businesses, the government and Gunns itself. In addition, the forestry industries' economic model is undergoing a slow motion collapse.

The benefits of the pulp mill are spruiked by the Government but:

Wood for biofuels; a missed opportunity

Summary
Throughout the pulp mill saga, the politicians have assumed that there is no alternative use for Tasmania's plantation resource. But the rapid change in concern for global warming and greenhouse gas emissions has brought biofuels very much to the fore.

The only source of renewable biomass capable of replacing the amount of fossil fuel required to meet greenhouse gas reduction targets without detracting from food production is plantation forest grown on low value land.

A forest biofuels industry to produce fuels from wood in Tasmania would be substantially more beneficial than pulp at every level, economically, environmentally and socially. However, no one is going to invest in biofuels when the forests have already been promised to a powerful monopoly.

Ignoring the prospects for a biofuels industry exposes the failings of both major parties and demonstrates how short sighted the 20year contract with Gunns is.