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Hundreds of jobs are on the line at a sawmill at Heyfield in Victoria's east if it does not get access to a long-term supply of timber, the ABC understands.
Australian Sustainable Hardwoods (ASH), which employs about 250 staff, processes about 150,000 cubic metres of timber each year supplied by state-owned logging company VicForests.
Spokesperson for ASH, James Lantry, said the owners would meet with staff tomorrow.
The mill operates under a long-term timber supply (around a 20-year) agreement," he said in a statement.
"The current agreement ends 30 June 2017. The mill has no supply beyond this time.
"The owners of the mill will be in a position to make a fuller statement after we have met with our staff at the mill."
The ABC understands the mill has been offered short-term supply, but at a significantly lower volume.
Without a long-term timber supply, it will not be viable to keep the mill open.
ASH bought the mill from Gunns in 2012 for about $28 million.
The mill is the main source of hardwood for the state and the largest processor in Australia.
Andrews Government 'refused' to discuss contract
The company criticised the Andrews Government for "refusing" to meet with it to discuss a new long-term supply agreement.
It said the mill at Heyfield was a critical part of the local economy and there were also thousands of indirect jobs now at risk.
"ASH is now at a turning point regarding its future and the future of thousands of Victorian jobs is thus now at stake," it said in a statement sent to state MPs.
"The fate of a major Victorian owned and operated business enterprise, which is a major employer and import substitute, located in regional and rural Victoria, now sits squarely with the Andrews Government."
The Government was contacted for comment.