Impacts of plantations for the proposed pulp mill

The expanding area of plantations intended to feed the proposed pulp mill, is already having a major impact on the state.

Water

Mr Bill Kelty

He’s done it again.

This time in broad daylight.

Under the gaze of thousands of Gunns’ watchers, CEO Greg L'Estrange has once again manufactured a few book entries to help Gunns achieve a modicum of profit and loss respectability.

That boy certainly has chutzpah.

He didn’t quite make a profit, but an EBIT of $5 million loss for the first half of the 2010/11 year took a bit of work.

This is a briefing paper on the current debate over the future of Tasmanian forestry and Gunns’ planned pulp mill prepared by TAP Into A Better Tasmania, November 2010. A pdf is available for downloading from below.

For further information please contact media spokesman Robert McMahon on 0448 547 290 or email bob@orielstudio.com.au

Introduction

A stalled proposal for a world scale pulp mill, the slow motion collapse of the forest industry, the astonishing alignment of environmental groups behind industry for a plantation-based pulp mill and the prospect of big money changing hands marks an extraordinary period in a small island’s history.

So how did all this happen? It’s time to examine the causes in detail because to misdiagnose the causes invites the wrong solution. One solution being proposed, for example, involves ‘compensating’ the forest industry to the tune of over a billion dollars. But that in turn carries its own serious consequences eg. lack of funding for public hospitals.

The interpretation of the causes presented here provides a big picture perspective from a hitherto ignored community view, the one that the special interest groups involved don’t want to hear.

So how did we arrive at the point where the aims of some environment groups now mesh with industry, where conservationists signed up to support a plantation industry and a pulp mill in Tasmania, and the community was sidelined?

The story started decades ago.

Introduction

CEO of Gunns Ltd, Greg L’Estrange told ABC Stateline (25.10.10) that Gunns would work “with the community so they understood what the pulp mill facility planned for the Tamar Valley is”.

We don’t feel confident that he will explain why his pulp mill will stink as do all others of this type around the world. So TAP Into A Better Tasmania has followed the foul odour trail through leaked letters, restricted terms of reference and incomplete reports to produce this Odour Advisory. It tells the story that Greg L’Estrange won’t and why it is a significant risk for business and health of the 100 000 people who live in the Tamar Valley.

The assessment of this issue carried out to date has looked only at odour from the stack, and not at odour which after about twelve months starts to leak from thousands of pipe seals and other leakage points. These fugitive emissions pose the biggest threat to your business, as they make up 98% of the odour escaping from pulp mills, including the most modern ones.

The Resource Planning and Development Commission (RPDC), which was initially given the task of assessing Gunns’ proposal, determined that the odour zone would have a radius of 55k around the Long Reach site. This odour will affect all wineries, tourist operators and other businesses in the zone; Tamar Ridge is of course only 5km from the site and will be one of the businesses worst affected.

This poses serious political, financial and project risks for potential joint venture partners and business investors alike. If a financial backer can be found, only one more regulatory hurdle (permit for marine discharge into Commonwealth waters in Bass Strait) has to be cleared before construction may begin.

The history of the failed assessment of odour is summarised in the next few paragraphs.

First published on Tasmanian Times

The Truth and Reconciliation Roadshow continued last week with a presentation by Gunns’ CEO to a conference run by investment bank UBS, coincidentally a Gunns’ shareholder.

The changes from the presentation which accompanied the release of Gunns’ preliminary 2010 financials in mid August were subtle and revealing of the future chosen path.

John Gay’s business model was then described as being “a conglomerate of long life low yielding assets…..(consisting of) many businesses….. excessive levels of encumbered assets .....excessive debt levels to earnings,..... (where) potential investors do not understand the business.”

The latest presentation includes further criticisms of the old model. Mr L’Estrange confirmed that Gunns was “cash negative” and was bedevilled by “aging inefficient assets”.

Cash negativity is a fairly serious condition. If it persists disaster usually awaits. Aging inefficient assets make the problem worse. Forget about a social license. Gunns needs cash and a more ‘efficient’ portfolio of assets.

In August the new look Gunns was to comprise a division devoted to ‘hardwood and softwood’ sawmilling.

This has now been revised to ‘softwood processing’ only. No mention of hardwood sawmilling. Literally, this means an exit from all hardwood sawmilling not just native forest sawmilling.

Normally a CEO when spruiking his Company will attempt to explain and justify the latest P&L Statement. UBS has been critical in the past of the book entries of Dickensian proportions that have been used to prepare Gunns’ financial accounts. Hence Greg didn’t dwell on Gunns’ appalling 2010 results. He was on a hiding to nothing. He simply said “if your investment focus is purely about this year’s trading, GNS is not your stock”.

Never a truer word has been uttered.

TAP supports promotion of Talent, Innovation, Diversity and Environment (TIDE) and a shift in government policies towards promoting more diversified resilient sustainable development based on Tasmania’s unique clean island qualities, niche markets and favourable climate. But Gunns' proposed pulp mill is damaging to TIDE and displaces opportunities for community and regional growth.

Adapted from the Cool Cities program, Michigan, USA, the acronym TIDE represents four conditions that are holistic and systemic rather than causal. Each one is necessary but by itself is insufficient for generating long term prosperity. To attract creative people, generate innovation and stimulate economic growth, there must be substantial, balanced performance across all four.

In TAP’s assessment, Gunns’ proposed pulp mill has a negative effect on Talent, Innovation, Diversity and Environment and therefore scores a fail on each condition.

By John Lawrence

First published 07.10.10 on Tasmanian Times

The forest industry’s slow motion train wreck continues its inexorable journey.

There are many, on both sides of the forest debate who appear to accept the urban myth that had it not been for the actions of high profile activists, Gunns’ former CEO would still be ensconced in Lindsay St Launceston.

A quick glance at the ASX announcement on 16th August 2010 outlining Gunns’ achievements in the financial year 2010 reveal that Gunns’ old business plan was a failure. The company’s old model was described as being “a conglomerate of long life low yielding assets…..(consisting of) many businesses….. excessive levels of encumbered assets .....excessive debt levels to earnings,..... (where) potential investors do not understand the business.”

It took the new Board less than 3 months to clearfell the legacy of Miranda Devine’s Working Class Hero (Devine retribution ... John Gay: working class hero and The Devine lie.)

The CEO’s demise and the uncertain state of his former bailiwick are due to its flawed business model, not the actions of one or two of its opponents.

There’s a real danger that erroneous reasons for the predicament facing the forest industry will lead to erroneous recommendations for a way forward.

Whatever the outcome of the Roundtable the next step will require heaps of money. From taxpayers probably. So an understanding of the current situation from a $ viewpoint must surely be close to the top of the list of current priorities.

Sunday 1 August 2010. TAP media release
 
"Internal polling of the northern Tasmanian 63 telephone district shows a clear majority of the electorate is less likely to vote for a political party that intends to support Gunns proposed pulp mill with taxpayer funds," said TAP Into A Better Tasmania spokesman, Rod Hutchins.
 

Dear Premier,
Following your impromptu meeting with TAP members at the Queen Victoria Museum and Art Gallery on Friday 2 July, we wish to explain further our concerns and what we believe is required to fix the turmoil created by your predecessor over Gunns’ proposed pulp mill.