Summary
The demand for hardwood in Asia is expected to continue to grow significantly over the next 10-20 years - especially as India's paper industry develops to meet the needs of its huge middle class. At least a half dozen new world-class mills will be needed. The Gunn's mill in Tasmania is ideally located to supply the Indian sub-continent and all of SE Asia as well as China. The Government has granted approval but a group of very aggressive environmentalists have said they will stop at nothing to prevent this mill from being built. There are a number of conflicting forces at work here....on the one hand there are the commercial considerations (i.e. to make money), plus the Australian governments desire to expand exports and improve their balance of trade, and then there is also the global need for high quality hardwood. Opposing these positive benefits are the "NIMBY" environmentalists.
Analysis
This proposed mill would cost US$1.77 billion and produce 1.1million mt/year of bleached eucalyptus market pulp (the major component in UFS and CFS papers). The cost 5 years ago would have been only US$1.3 billion. Gunns has been cultivating cold-weather-resistant eucalyptus plantations for the past 30+ years and exporting the chips to Pacific Rim countries. Therefore, there is no threat of destroying existing natural forests. The value-added aspect is considerable with the government realizing a tremendous export benefit. All the permits have been granted with safeguards scheduled to be in place.
Gunns has chosen a joint venture partner but is reluctant to name the company. Conjecture has it may be either from Japan or China.
The environmental campaign is headed by Senator Bob Brown of the Federal Greens party who appears to be determined to stop the mill at any cost inspite of the fact that there are a number of significant material benefits. For example, having a major hardwood mill on the island will undoubtedly, in time, result in a modern high speed paper machine being built. This would provide yet another value-added export opportunity as well as supplying much of the domestic need (which would eliminate the need to import paper).
