Tas govt welcomes end of Gunns guarantee

(AAP) The Tasmanian government says it is pleased timber giant Gunns Ltd will not ask it to renew a wood supply guarantee for its proposed Tamar Valley pulp mill.

A tough talking Premier David Bartlett said in June the mill will "live or die" by
its ability to meet a November 30 construction start-up deadline that was a
condition of the agreement.
The sovereign risk agreement provided a $15 million security to Gunns in the event
of Forestry Tasmania being unable to supply the required volume of logs to the
proposed $2.2 billion mill.
"The cabinet has provided a time frame for the project to live or die by," Mr
Bartlett said about the November 30 deadline.
Gunns' shares nosedived this week after the mill's fervent supporter, former premier
Paul Lennon, said on Tuesday the project "may not be alive".
Gunns chairman John Gay issued a statement in response saying it was inaccurate to
say the northern Tasmanian mill was not proceeding.
The woodchipper on Friday informed the ASX it will not seek to renew the sovereign
risk agreement for wood supply to the Bell Bay Mill.
The company also said it was continuing to proceed with the pulp mill project as
planned.
Gunns says it does not believe the sovereign risk agreement materially changes the
risk profile of the project and it's confident of Forestry Tasmania's ability to
meet its commitments to supply wood.
Treasurer Michael Aird welcomed the Gunns statement, saying he was "pleased" with it.
"The government has done everything possible to ensure the mill goes ahead but the
decision to proceed is up to Gunns and its financiers," he said.
However, Mr Aird also said the agreement was "not crucial" to Gunns.
Mr Aird was pleased because it saved the government having to act to end the deal
after Mr Bartlett's "live or die" assessment, a spokesperson for Mr Aird said later.
On another front, landowners are yet to accept Gunns' August offer to pay for an
easement across their properties for a water pipeline crucial to the mill's
operation.
Mr Aird said the government would not move to acquire the land for the pipeline.
Wilderness Society campaigner Geoff Law said the mill project was going backwards fast.
"The loss of the sovereign risk deal and the snookering of the Gunns pipeline mean
that the pulp mill project is going backwards fast," Mr Law said.
Tasmanian Greens leader Nick McKim said Mr Bartlett must now instruct Forestry
Tasmania to terminate its entire wood supply agreement with Gunns after his "live or
die" comments.
"All the cards are stacking up against this pulp mill and the only thing keeping it
alive is David Bartlett's refusal to terminate the wood supply agreement," he said.