Gunns pulp mill project permit questioned

The Tasmanian environment regulator asked Gunns to defend the validity of the $2.3 billion pulp mill project permit after claims it has lapsed. The request followed a review triggered by a minor variation application to the project’s stormwater plan.

The permit, which was pushed through state parliament in 2007 at the forestry company’s behest, required Gunns to "substantially commence" the controversial pulp mill project by August 30 as a condition of the approval.

According to Alex Schaap, director of the Tasmanian Environment Protection Authority, Gunns’ request to make a minor variation to the project’s stormwater plan prompted the regulator to examine the permit’s validity and ask Gunns to justify that the permit remains in force.

Alex Schaap is the director of the Tasmanian Environment Protection Authority (TEPA). He said a minor variation request to the pulp mill’s stormwater plan triggered a need to examine whether the project permit remains valid.

Gunns had been in a trading halt for four weeks and issued a market update saying it would advise the government by the following day whether it had accepted a settlement offer related to outstanding disputes.

The settlement, if accepted, would extinguish Gunns’ residual legal rights over native forest contracts and resolve disputed debts the company owes to the state timber agency, Forestry Tasmania.

For investors, the regulator’s request to defend the pulp mill permit and the pending settlement offer are material developments: they relate to the company’s legal rights over native forest contracts and disputed debts to Forestry Tasmania, which could influence Gunns’ financial and operational position.

Investors should monitor official communications from Gunns and statements from the Tasmanian Environment Protection Authority (TEPA) and the Tasmanian government for formal updates on the permit validity review and any decision on the proposed settlement with Forestry Tasmania.