Gas prices could kill off Australian Paper

Tuesday, March 31, 2015

Australian Paper which manufactures REFLEX paper from the Central Highland ash forests, is Victoria’s major user of natural gas. The price of gas is set to rise astronomically Australian Paper Mill chip pilesdue to increased sales offshore. This will be a serious financial burden for this Nippon owned pulp and paper mill. As a result it is pleading for government intervention (more subsidies?) to help it adapt to the price increases. It claims the price hike could risk seeing operations closed or relocated, with the added spurious claim that thousands of jobs will be lost otherwise.

Brian Green, a manager at the Japanese owned Australian Paper mill,  said AP had been unable to secure affordable long-term gas supplies from Esso. As a result the company was now facing a "crunch" year. Unless cheap gas supplies can be locked in by December it could lead to operations being scaled back. AP has failed to post a profit for the last few years, meaning they are running a pretty rickety business anyway.

Their claim of the logging industry employing 20,000 people in the region is mirthful. We suspect they must be counting every shopkeeper or postie who serves a logger’s kid’s school teacher, and similar dubious calculations.  

The start-up of LNG exports from Queensland in 2015 and the stalling of coal seam gas development in New South Wales have combined to force prices up for domestic users, faster than would otherwise have occurred. Industry and domestic users were hit with a more-than-doubling of the price of their gas overnight at the end of 2010, from $4 a gigajoule to between $10 and $12.

If rising energy prices are to hit us all, we can at least take some comfort in the fact that it could be the death knell for Australian Paper and a lifeline for our Leadbeaters Possum.