Media reports November 2010


27 November 2010 Some Gunns Limited workers about to lose their jobs believe the company faces a "no pulp mill, no Gunns" scenario. CFMEU forestry division state secretary Scott McLean's prognosis for if the Tamar mill does not go ahead is rather different, but perhaps even more bleak. "It might be right to say no mill, no forest industry in Tasmania," Mr McLean said yesterday after a meeting with Gunns workers including a group who are about to lose their jobs at the doomed Hampshire woodchip mill. Advocate

26 November 2010 The Greens have slammed Gunns Limited after the timber company called for compensation to move out of the logging of native forests. Greens forest spokesman Kim Booth today said that taxpayer's funds should instead be spent on hospitals, schools and essential infrastructure. "Gunns Limited have already been the beneficiaries of hundreds of millions of dollars in public subsidies, they receive a virtually free wood supply due to arrangements with the out-of-control agency Forestry Tasmania, and if anyone should be paying compensation it is Gunns, not the long-suffering taxpayer," said Mr Booth. "Gunns are restructuring because business as it stands has collapsed, and there is no way that any more public money should be paid to bail them out. Enough is enough." Mr Booth also said that the Greens stood firm on their opposition to the proposed Tamar Valley pulp mill. "Gunns say they are now reliant on the Tamar Valley pulp mill proposal, but that proposal has never been properly assessed, does not have a social licence, does not have a water pipeline, and has no federal permission to dump 64,000 tonnes of effluent in Bass Strait every day," Mr Booth said. "There is no way that the Greens, or the people of the Tamar Valley, will allow this pulp mill proposal to go ahead." Mr Booth went on to say that instead of asking for another public hand-out, Gunns should return their share of the hundreds of millions of dollars of public money that had been poured into the forest sector during the past decade." Examiner

26 November 2010 Gunns will not make the 2010 year-end deadline for announcing a pulp mill partner, but new chairman Chris Newman said the timber company had "unquestionably" moved closer to obtaining a so-called "social licence" needed to get the project across the line. The company is betting its future on the $2.3 billion pulp mill project which has divided communities for seven years and which has been political dynamite, The Australian Financial Review. Farm Online

26 November 2010 The last big obstacle to federal environmental approval for Gunns' $2.2 billion Tasmanian pulp mill is near to being cleared - but the timber company remains without a vital investment partner. A draft $4 million hydrodynamic modelling report was submitted to the federal government this week as Gunns sought a federal signoff on the effect of effluents on Bass Strait. "We are quite confident these studies have confirmed earlier work that was done," Gunns' sustainability manager, Calton Frame, told the annual meeting in Launceston yesterday. "There won't be an impact on the marine environment." But nearly six years after it was controversially announced, company chairman Chris Newman revealed that the project central to Gunns' future was still unable to gain a financial partner. "We had expected to announce a joint-venture partner by now, but the due diligence has taken much longer than anticipated," Mr Newman said. "However, the most pleasing outcome is that our potential partners have confirmed the soundness of the underlying business case." Managing director Greg L'Estrange, newly promoted to the board from chief executive, said several interested parties remained cautious given the project's history. He said the Swedish company Sodra, the first publicly to show interest, was now not part of the process, and there was no South American involvement either. Gunns confirmed that its woodchip exports were hard hit by the high Australian dollar, but the currency's strength was a mixed blessing for a project sourcing many key components overseas. Mr L'Estrange said that with woodchip earnings down by $68.3 million in 2010 and an estimated underlying earnings before interest and tax of $51.4 million, the outlook was for another difficult year. Busines Day

25 November 2010 The reshaping of Tasmania's forest industry is gaining pace, with Gunns Limited warning 150 jobs are set to go as it shuts down native forest woodchipping. The restructure is running in parallel with the development of a peace deal between green groups and industry for most logging to stop in the state's native forests. Mr L'Estrange confirmed yesterday that external forces continued to hit Gunns' native forest operations. He said the rise in the dollar had made Gunns' products very uncompetitive in Asian markets, and in Japan in particular there was a move away from woodchips sourced from natural forests. Directors will be pressed on Gunns' long-planned $2.2 billion pulp mill project, which at last report was still undergoing due diligence with two potential investors. Despite the peace deal, green groups still oppose the project. In an effort to restructure the logging sector, environmentalists, unions and industry groups have agreed to a statement of principles that would see the end of native forestry logging in return for a plantation-fed pulp mill. Business Day

14 November 2010 Gunns pulp mill project officer Chris Davey gave the Sunday Tasmanian's NICK CLARK a guided tour. Opponents have referred to the site being at Long Reach, a section of the Tamar River. The entrance to the woodchip mill at the southern end of the site refers to Gunns Long Reach. By road, the woodchip mill's entrance is 10km away from the road into the Bell Bay industrial zone and 6km from the Bell Bay power station. Recent moves in the forestry industry have seemingly tempered opposition to the mill. Gunns, which has said it would operate the mill with 100 per cent plantation timber from the start, is expected to withdraw from native forest logging soon. Nevertheless, opponents remain opposed to the proposed siting of the pulp mill in the Tamar Valley though their opposition to pulp mills per se has moderated. Their opposition centres around concerns about effects on the tourism industry and lifestyle. Most opponents, now splintered into three groups, cite the key factors as odour, log-truck traffic, air emissions into an area with an inversion layer and effluent emissions into Bass Strait. Mercury

1 November 2010 A German-based investment bank has advised against investing in Gunns following its forecast drop in earnings. Deutsche Bank has also questioned Gunns' ability to fund its Tamar Valley pulp mill, after the Tasmanian timber company warned of an earnings slump. Last week, Gunns warned its before tax profit for this financial year is expected to drop about $10 million. In a note to investors on several Australian companies, Deutsche Bank has downgraded its rating on Gunns shares from "hold" to "sell". Advisers for Deutsche Bank say they "struggle to see" how Gunns' restructure will "add value" and how the company "can contribute its share of the funding" for the pulp mill. The bank says it has concerns about Gunns' balance sheet, despite Gunns' assurance that it is meeting debt repayments. Gunns has declined to comment. Yahoo Finance

1 November 2010 (Gunns) said it was aiming to FSC certify the mill, which will be "ranked in the top five mills in the world" for environmental outcomes. The company also used the market update to say that "due diligence process in respect of the pulp mill investment has progressed satisfactorily". A Gunns spokesperson (said) the company had started the "long process" of achieving FSC certification. Vica Bayley, campaign director for the Wilderness Society Tasmania, told ProPrint that the NGO approved of the move, particularly because FSC certification mandates community involvement. "It's welcome. It's a step in the right direction," he said. However, he added that the Bell Bay project in its current form was "too far gone to receive a social licence". "As long as the project has been approved having been fast-tracked and using inadequate processes, it can never be accepted by the community. For that, they'll have to go back to the drawing board," said Bailey. "The Tasmanian Forest Statement of Principles is a major step forward but we acknowledge the need to consult with the community and other groups not party to the statement in respect of the environmental credentials of the pulp mill as now planned," the company said. The company last week also downgraded its earnings forecast for the current financial year, saying that factors such as the strengthening Australian dollar had forced it to revise its underlying EBIT forecast from $50m-$60m to $40m-$50m. Proprint News