Gunns pulpmill fast-tracked

Friday, April 1, 2005

The Tasmanian Government will declare Gunn's planned $1.2 billion pulpmill (one step along the production line from woodchips) as a Project of State Significance. This will allow it to be fast tracked and bypass many environmental and other planning regulations.

It recently released proposed amendments to planning laws to ensure a smooth approvals process for Tasmania's first paper pulp mill. The Tasmanian Government says the Planning laws don't account for the complexities of this project (!). It plans to declare it a "Project of State Significance" to allow for fast tracking.

The Opposition leader, Rene Hidding, said "frankly I don't care who spends $1.2 billion in Tasmania to build a pulp mill, we just want the pulp mill".

The Howard Government has pledged $5 million to help get the mill built.

BUT HAS GUNNS MISSED THE BOAT ?

Without very large subsidies, the Gunns mill may never get off the ground and even if finally given the go-ahead, could have 'missed the boat' by the time it is built. It is a very marginal and risky investment.

Other countries are building pulpmills right now and so have maybe a three year advantage over Gunns. Why are pulpmills an advantage?

Because Gunns' customers, Japan and China, would rather buy pulp than the heavier, bulkier woodchips. Also, processing woodchips into the mash that's used for paper making, uses a lot of water and energy, and both are very scarce and valuable in China and Japan. Pulp factories are also very polluting and therefore unpopular around the cities where they are operating.

If Gunns continues to just sell raw woodchips it will become quite a tough market in a few years as other countries will secure the buyers before Gunns does.

However, Gunns would have an advantage over some pulp mills around the world because wood, water and power costs are cheap in Tasmania (subsidised by the public and the environment). Though other countries would have a cheaper labour force.

But to make the mill financially viable it's got to be a certain size or there won't be the economies of scale. The problem is going to be the size. Gunns plan to put through a whopping 3.2 million tonnes of shredded tree trunks a year to produce 800,000 tonnes of dry pulp.

This could be why they are looking at finding more tree trunks from the mainland states. Even with all the help of the obliging Tasmanian Government, the project could be extremely marginal. This could also explain why they have gone back on their promise to make the planned mill worlds 'best and cleanest', and revert back to it being a cheap, dirty, chlorine polluting factory.

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