Outrage at woodchip mill deal

THE part-purchase of Gunns's Triabunna woodchip mill with a Tasmanian government loan has been confirmed, as controversy over the deal deepens.

By InvestSMART · 7 Jul 2011

By InvestSMART ·
7 Jul 2011

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THE part-purchase of Gunns's Triabunna woodchip mill with a Tasmanian government loan has been confirmed, as controversy over the deal deepens.

The Tasmanian Department of Development advised timber haulage operator Ron O'Connor its board had approved the loan, amounting to about a third of the undisclosed purchase price, a spokesman for him said last night.

Mr O'Connor still had information to provide to his main lender, but was ''very close'' to completing the deal, his spokesman said.

At the same time, Green opposition to the purchase strengthened with the revelation that the state timber agency, Forestry Tasmania had reached a supply and profit-sharing arrangement with Mr O'Connor to ensure the mill's future.

This meant potentially Forestry Tasmania was taking on some risk of the deal, the Greens' economic development spokesman Tim Morris said.

Continued operation of the chip mill is claimed by Premier Lara Giddings to be critical to the state's sawmilling industry.

Triabunna would give the millers a revenue source from pulpwood logs and sawmill residues, with Mr O'Connor's Fibre Plus Tasmania planning to export more than 500,000 tonnes of chips annually.

But with many details of the deal still unknown, the Greens and independent MP Andrew Wilkie attacked the state's minority Labor government. Mr Wilkie told Federal Parliament the state government was poised to lend an undisclosed amount of taxpayers' money to the ''foundering'' mill, aiding Gunns.

''And this is outrageous, because the handout would be just another thinly veiled payout to the company struggling to manage its daily cash flow, let alone build its stinking Tamar Valley pulp mill,'' he said.

Senate opposition leader Eric Abetz said that in opposing the deal the Greens were trying to further the interests of the party's biggest donor, Wotif's Graeme Wood.

Mr Wood, who gave the Greens $1.6 million at the last election, is reported to have wanted to use the Triabunna facility for tourism.

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Frequently Asked Questions about this Article…

What is the Triabunna woodchip mill deal and who is buying it?

The article reports a part-purchase of Gunns' Triabunna woodchip mill. Timber haulage operator Ron O'Connor, through his company Fibre Plus Tasmania, is the buyer and was reported to be very close to completing the deal.

Is the Tasmanian government involved in financing the Triabunna mill purchase?

Yes. The Tasmanian Department of Development advised Ron O'Connor that its board had approved a loan to support the purchase. The loan reportedly amounts to about one-third of the undisclosed purchase price.

How much did the government loan for the Gunns mill cost taxpayers?

The article says the loan was about a third of the undisclosed purchase price, but it does not state the exact dollar amount, so the precise cost to taxpayers was not provided.

Why has there been controversy and political opposition to the woodchip mill deal?

Controversy centers on concerns that taxpayers' money is being used to support a struggling private mill and that parts of the deal are unclear. The Greens and independent MP Andrew Wilkie criticised the government for lending an undisclosed amount to what Wilkie called a 'foundering' mill, and raised worries that Forestry Tasmania may be taking on risk under the arrangement.

What role does Forestry Tasmania play in the Triabunna mill arrangement?

According to the article, Forestry Tasmania reached a supply and profit-sharing arrangement with Ron O'Connor to help ensure the mill's future. The Greens said this meant Forestry Tasmania could be taking on some of the deal's risk.

What economic benefits are claimed from keeping the Triabunna chip mill operating?

Premier Lara Giddings said continued operation is critical to the state's sawmilling industry. The mill would give millers revenue from pulpwood logs and sawmill residues, and Fibre Plus Tasmania planned to export more than 500,000 tonnes of chips annually.

Are all details of the Gunns mill deal publicly known?

No. The article makes clear that many details of the deal were still unknown at the time, including the full purchase price and the exact amount of the loan.

How have other politicians and stakeholders reacted to the Triabunna mill deal?

Reactions were mixed and politically charged. Andrew Wilkie strongly criticised the loan as a taxpayer handout to a struggling company. Senate opposition leader Eric Abetz accused the Greens of opposing the deal to favour their major donor, Graeme Wood, who reportedly wanted to use the Triabunna facility for tourism; the article notes Wood had donated $1.6 million to the Greens at the last election.