The forestry assault

When the absurd “world scale” pulp mill was first mooted, it was well known that global prices for pulp were on a long term decline and that low cost suppliers would dominate. Indeed expert forest actuaries and others advised the ill fated Resource Development and Planning Commission (RPDC) of the realities. The Labor government’s answer to that problem was to dump the RPDC!

DBS Vickers pulp and wood report (PDF 147KB) published at the time the pulp mill was to be evaluated, forecast current world realities …

Low cost suppliers could displace existing producers. A key trend on the supply side is that producers from low-cost regions like Brazil and Indonesia could displace higher cost producers from North America and Europe. This is especially so given that supply is expected to exceed demand over the next few years. The closing down of some capacity should then help to tighten supply.

When we read the Vickers report (and many others) and looked at Gunns “world scale” proposal in context, we saw that the entire idea was ridiculously over scaled for a small island like Tasmania. The only “solution” was more and bigger subsidies from taxpayers; money that couldn’t possibly be justified if forestry was “sustainable” as the industry insisted.

To get a better sense of what “world scale” means, Gunns mill was to produce about 1 million tonnes of pulp per year, requiring 4 million tonnes of green pulp wood. With a production rate per hectare of land of around 150 tonnes per hectare taking around 15 years to grow, that means clearfelling about 270 sq km of densely planted trees each and every year - about twice the area of Sydney.

Since it takes about 15 years to regrow, the total area to be shaved clean by the mill would be around 4,000 sq km! To produce that timber requires more than 600 Gl of free water taken from Tasmania’s catchments each year at the expense of food producers and communities, plus a load of fresh water to be converted into a toxic waste stream by the pulp mill’s operations.

From recent collapses in the pulp wood supply industry it’s pretty clear that Tasmania cannot compete on price in global markets in which the price paid is not only non-negotiable, it’s declining every year!

Tree growers and forestry contractors are the ones who must suffer the predictable price squeeze. Taxpayers must fork out for any losses via a cosy $15/tonne 20-year wood supply deal between the government and Gunns that prices our resources to attract foreign buyers. We already know that …

The impacts so far include …

• closure of sawmills, many of which were family owned;
• job losses as mechanisation takes over from manual work;
• expansion of activities to feed a global market with a low value commodity (fibre);
• expansion of plantations to nearly 3,000 sq km requiring 600 Gl water each year;
• large reductions in rates income to Councils as plantations pay a fraction;
• legal problems for everyone as forestry exempted from laws that apply to taxpayers;
• health and other system failures as taxes are diverted to forestry subsidies;
• serious concerns that vast plantation operations are polluting water supplies;
• health problems as autumn forestry “burns” cloud skies with particulates;
• frightening driving experiences from encounters with massive log trucks; and
• MIS failures creating big losses for mom and pop “investors”.

Some argue that Gunns is fortunate that they don’t have their $2.5 billion pulp mill already because they’d have more than $3 billion debt that they couldn’t pay off as opposed to the current level of $600 million.