Partial transcript from In Camera session of HA hearings last week.
- There are certainly many lost opportunities. If you look at the creation of the hardwood plantation estate in this State, I think the Federal Government has contributed $500 or $600 million to create 50 000 hectares, the most expensive plantation in the world’s history.
- Which ultimately means you don’t have a snowflake’s chance in hell of getting an industry that is going to survive if it relies on public money to put it in in the first place.
- Yes, that’s my view
• Thursday, Nick Clark, Mercury: $10m forestry row exposed
AN administrative blunder has exposed a $10 million dispute between Forestry Tasmania and its biggest customer Gunns Limited.
In a mistakenly published Hansard transcript of in-camera evidence, Gunns managing director Greg L’Estrange said Gunns disputed $9.8 million of $15 million that FT billed it on April 30.
He told a parliamentary committee Gunns acknowledged just $2.2 million of the claim which dated back to 2008-09.
The dispute revolves around a take-or-pay clause in a 20-year Long Term Pulpwood Supply Agreement for the Bell Bay pulp mill signed in 2007.
FT believes that the take-or-pay provision of the contract specifies that Gunns pay if it takes less than 85 per cent of the contracted 1.5 million tonnes of pulpwood a year until 2027 - whether it takes delivery or not.
When it was signed in 2007, former premier Paul Lennon said timber products would be worth $200 million a year more under the deal.
It is understood Gunns does not believe the contract is valid.
Mr L’Estrange said the issue could end up in commercial arbitration.
In other revelations, Mr L’Estrange:
Accused FT of establishing the “most expensive plantation in the world’s history” and said it should get out of plantation.
Said FT was selling sawlogs to Gunns’ competitors at a 10 per cent cheaper price.
Said FT “overcharged us $5.4 million for China volume”.
Agreed punishing Gunns was part of the reason FT charged Gunns higher rates.
The latest revelations come on top of a bitter standoff between FT and Gunns over softwood supply to the Bell Bay sawmill.
FT managing director Bob Gordon recently told the committee the company was owed a total $40 million but he would not reveal by whom, saying it was a publicly listed company.
Both firms have significant financial pressures with FT having been furnished with a letter of comfort by the State Government in February and Gunns having to repay its bankers $55 million by the end of June.
Of the $15 million claimed, Mr L’Estrange said $5 million was due to FT on normal trading terms while $9.8 million was in dispute.
Since the LTPSA was signed in 2007, Gunns has announced it would use only plantation timber in the pulp mill rather than native forest.
It also said it would quit all native forest operations, leaving a cloud over the LTPSA which runs to 2027.
Mr L’Estrange said FT had spent $500-600 million to create 50,000ha of plantation - “the most expensive plantation in the world’s history”.
And he said publicly earlier in the same hearing that FT was the most difficult forestry company in Australia to deal with.
In response the next day, Mr Gordon described Mr L’Estrange’s behaviour as bizarre.
Committee chairman Kim Booth said it was a parliamentary error.
“I was shocked to discover that the transcript had been published by Parliament and I understand that steps have been put in place so that it never happens again,” he said.