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 which parties are involved?

The deal is a part-purchase of Gunns' Triabunna woodchip mill being completed by timber haulage operator Ron O'Connor (trading as Fibre Plus Tasmania) with support from a Tasmanian government loan. Forestry Tasmania is reported to have a supply and profit-sharing arrangement related to the mill's future.

How much is the Tasmanian government loan for the mill purchase?

The Tasmanian government board has approved a loan that a spokesman says amounts to about one-third of the undisclosed purchase price. The exact dollar amount has not been publicly revealed.

Why is there controversy and political opposition about the woodchip mill deal?

Greens and independent MP Andrew Wilkie have criticised the deal because key details remain unknown and they say taxpayers' money could be at risk. Wilkie described the loan as potentially aiding the struggling mill owner, and the Greens highlighted Forestry Tasmania's supply and profit-sharing arrangement as taking on some risk.

What role does Forestry Tasmania play in the Triabunna mill deal and does it assume risk?

Forestry Tasmania has reached a supply and profit-sharing arrangement with Ron O'Connor’s Fibre Plus Tasmania to help secure the mill's future. The Greens have said that arrangement could mean Forestry Tasmania is taking on some of the deal's risk.

How could the mill deal affect Tasmania's sawmilling industry and woodchip exports?

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

What should everyday investors watch for regarding transparency and taxpayer exposure?

Investors should monitor official disclosures about the loan terms, the undisclosed purchase price, details of the Forestry Tasmania arrangement, and any government statements. These details will clarify potential taxpayer exposure and the extent of public-sector involvement in the deal.

Could the deal affect Gunns or related companies, and what signals should investors look for?

Some critics argue the loan could effectively assist Gunns—parliamentary opponents described it as a bailout-style handout. Investors should watch company announcements, any creditor or lender updates, and market or regulatory responses to assess financial impact and reputational risk to Gunns and related parties.

Which political figures and donors are connected to the debate, and why might that matter to investors?

Key figures in the debate include Premier Lara Giddings, Greens spokesman Tim Morris, independent MP Andrew Wilkie and Senate opposition leader Eric Abetz. The article also notes donor Graeme Wood (major donor to the Greens) has an interest in using the Triabunna facility for tourism. For investors, these political and donor links matter because they can influence public scrutiny, policy outcomes and the pace of any government-backed support.