The Aprin takeover of Triabunna chip mill with the help of the State’s approved loan has enraged many Tasmanians, including supporters of the Greens who see this deal as the final straw to break their long-term allegiance because of the perception that Greens Cabinet members are silent ( Gunns is dead. Long live Gunns ). Greens MP Tim Morris details the saga ... from the Greens’ side
Given the (not surprising) interest in the matter of the future of the Triabunna Woodchip Mill, I think it timely to give an update on where this intriguing tale of behind the scenes deals is at.
It is called: The sorry saga of the Triabunna Woodchip Mill and how Labor just can’t help itself….
The plot…how to stitch up a deal selling vast quantities of public resources (forests) at a very low price into as yet undisclosed markets at an undisclosed price by lending a company (because it can’t borrow all the cash it wants on the commercial market) undisclosed millions of dollars from an off balance sheet government fund. This is in order to fool a handful of sawmillers into believing that great wealth will be bestowed on them for their several tonnes of waste; the spin off from this will be that another company will reap vast wealth from the sale of this woodchip mill which will enable it to fund with cash the construction of the world’s biggest pulp mill and everyone in Tasmania will live happily ever after.
The cast…(yet again) Labor Premier, Labor Resources (Forests) Minister, Labor Economic Development Minister, Gunns Ltd (desperate for cash) and Aprin (first appearance).
The story so far…
Once upon a time, Gunns announced on the 1st of April 2010 that the Triabunna woodchip mill would cease operations for 8 weeks from mid-April. http://www.asx.com.au/asxpdf/20110401/pdf/41xsqdd7vqf49f.pdf On 1st June they announced the exiting of all native forest operations; this has been widely understood to mean that the Triabunna mill would not be reopened in their name and was definitely for sale. http://www.asx.com.au/asxpdf/20110601/pdf/41yzcq9wlfr81v.pdf
For most of this year there has been a debate around what the southern sawmillers would do with their residue (edgings, etc.), they argued that if they could not sell their residues (edgings) as woodchips then they would not be able to operate profitably. As Gunns would no longer be purchasing them, then there was clearly a crisis that could only be resolved by someone else taking over Triabunna mill.
I met with Torenius and Kelly, owners of 2 mills in the southeast and urged them to explore other options such as the firewood market as it would pay better prices and not have them reliant on the export market that was no longer interested in their wood. Suffice to say they were not interested. I give credit to Kelly for having developed a laminated beam process to use up a substantial part of his residues.
Sometime about the 24th of May I had word that Aprin was moving to purchase the mill, so I kept a close ear to the ground from there on. By the 14 June it was time to start asking some questions in the Parliament as the trail had led to Forestry Tasmania potentially being involved somehow. (Download the ‘sequence’ attachment).
Resources Minister Bryan Green revealed in response to my questioning that FT has provided a ‘letter of intent’ to Aprin (Fibre Plus); this can only be an offer of a contract to supply a certain amount of pulpwood, over a certain timeframe, in the event that Aprin purchase and operate the Triabunna mill. Rumours abounded that Forestry Tasmania might buy and operate it, either alone or with a consortium of sawmillers; however FT is a bit hard up for cash at present and will be lucky to pay their power bill. The only thing they have is control of lots of trees (for the moment at least), so they could write a letter that gave away the rights to many of these trees, potentially for a very long time; thus they are in on the deal, but don’t need to stump (pun!) up any cash.
Given that the market for native forest woodchips in Japan has all but dried up it is safe to assume that the next most likely market is China and we know that the Chinese are only offering about $120 per tonne BDU (Bone Dry Unit) as opposed to about $190 to Japan. If Gunns thought they could sell wood into China profitably then they probably would have done so, given their need for cash. So if Aprin are going to have a profitable operation then they need to have substantially reduced costs and this can only occur if they get the wood sufficiently cheaply and can reduce the costs along the supply chain. They own a lot of trucks so can minimise transport costs.
Interestingly Aprin is advertising on the web for customers to purchase Torrefied wood pellets*, which are super dried and pelletised woodchips (bio-fuel) that are designed for burning in furnaces, essentially competing with coal. http://www.tradeboss.com/default.cgi/action/viewcompanies/companyid/597397/ The Greens strongly oppose native forests being turned into bio-fuel.
Clearly Aprin has not been able to put together a business case that satisfies the commercial finance sector, thus they went to Economic Development Minister O’Byrne, on the 7th June, he (or his office) suggested that they request for a loan put to the Tasmanian Development Board (see the DED attachment about the rigorous assessment process). The TDB recommended the approval (subject to conditions) to O’Byrne, who, after an apparently rigorous assessment!, approved it 2 weeks later, on the 22nd June.
Treasurer Giddings also needs to approve the loan and at this time it is not clear when she did this, but possibly around the 24th June. The TDB has apparently not yet finalised the loan approval because Aprin have not yet the ‘conditions precedent’, however the rest of this story is all hidden behind the cloak of ‘commercial in confidence’. I have as yet not been able to identify what the ‘conditions precedent’ are, but the whole matter smells.
To conclude, the FT letter (which is still secret) appears to be contrary to the Statement of Principles on the grounds that there should be no new contracts entered into. It is also apparent that any market (which has not been revealed) that might exist (if it exists at all), is at a lower price and not commercially viable or Aprin would not be seeking loans from the TDB. So that means that in order to prop up a few southern sawmills (which have other potential local markets at better prices) the government is apparently willing to allow FT to sell very cheap native forest wood (guaranteeing no $ return to the Treasury ever), probably contravening the SoP and also willing to lend some millions of dollars (from a special fund)for this as well.
So just when we are getting somewhere with the marathon negotiations between Industry and the ENGO’s along comes a cunning plan which could well wreck the whole thing.
All this has occurred under 3 Labor Ministers, nothing goes to Cabinet where the Greens Ministers can have any influence. The even worse news is that the Liberals, if in government, would have done exactly the same, only more so.
Does anyone think there is anything wrong with any of the actions of anyone in or around government? Well the Greens consider the actions of all 3 Labor Ministers constitutes a lack of transparency and accountability in the extreme. We stand for, and will continue to fight for, the same values that we went to the last election. We have exposed this issue, whilst the Liberals sit in silence.
I wonder if Gunns are thinking they would get a better price and reputation if they can only extract themselves from this mess and accept the Cameron/Wood cash offer?
Till the next exciting instalment …
Tim Morris MP
Greens - Lyons
• Vica Bayley, Wilderness Society:
MEDIA RELEASE – 3 July 2011
FOREST VALUES LEAFLET HITS LETTERBOXES IN THE LEAD UP TO PUBLIC FORUMS
The Wilderness Society today launched a leaflet outlining the conservation values of Tasmania’s native forests. The leaflet is being distributed throughout the state, and is currently hitting letterboxes in New Norfolk and Launceston in the lead up to public forums to be held this week.
“Tasmania’s forests are globally significant and critical for maintaining a range of important values like wildlife habitat, carbon storage, fresh water supply and spectacular vistas,” said Vica Bayley, spokesperson for The Wilderness Society.
“Protecting these forests in National Parks and legislated reserves will protect these values, providing better opportunities than the repeated logging and burning of current commercial logging regimes.”
The leaflet, which includes a map of the areas identified on public land that need to be protected, is aimed at increasing public awareness of the conservation values of native forests and the pathways to seeing them properly protected.
“Increasingly, the public and the marketplace do not want to buy products that damage our native forests, their values or Tasmania’s unique wildlife. This has been a key driver the Principles Agreement and implementing this agreement presents the best way to finally see these forests protected,” said Mr Bayley.
“Today, logging continues in some of these forests proposed for protection as National Parks, pointing to the need for urgent Government action to legislate their protection.
“Protecting these forests from logging would be a defining moment in our history, and an opportunity for government to start building a sustainable economy underpinned by a resilient and healthy environment.
“On top of informing the public about the values of the forests, this leaflet urges them to contact the Premier and call on her to take urgent steps to protect our forests.”
Further Information: Vica Bayley - 0400 644 939
Forest for the Future Forums will continue this week:
Wednesday 6th July 6.00 – 7.30 pm
Social room attached to Council Chambers
Thursday 7th July, 6.00 – 8.00 pm
Lecture Theatre 1, UTAS Newnham Campus
Lecture includes the premiere of a new Blue Tier film.
Download leaflet: 0299ws_hcv_broshure_FA_PDF.pdf