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Branchline July 11, 2011


So where are we up to?

It's unusual for me to put pen to paper so soon after the last Branchline was distributed, but I wanted to bring you up to date at the earliest possible opportunity with a few things that have happened over the past few days.
The response to Friday's Branchline has once again brought home to me the importance of keeping our stakeholders, our staff and our friends as well informed as possible and to answer their questions as the need arises.
The level of confusion and uncertainty has obviously increased over the past 12 months as a result of the Statement of Principles, the impact of the Global Financial Crisis and the decision by our largest customer Gunns Limited to sell some of its sawmill and woodchip facilities, including Triabunna.
As far as the Statement of Principles goes, we along with others, are waiting for Mr Kelty to finalise his report, and then presumably it will be a matter for governments to decide the next step.
In terms of residue exports, Triabunna is an important piece of infrastructure and we are hopeful the change of ownership from Gunns to Aprin will occur sooner rather than later.
There have also been a number of questions about the re-positioning of Gunns and its impact on Forestry Tasmania. It is common knowledge that FT and Gunns have two long term wood supply agreements. Recently, consistent with its public statements, Gunns gave notice of its intention to terminate these contracts with effect from mid October. Under the terms of the contracts, the two parties are legally obliged to negotiate in good faith about terms for new wood supply agreements. Gunns and FT began those negotiations today at Gunns request.
I would also like to make some brief comments about the carbon tax. It will take a few days for us to fully understand the government's proposal but we are disappointed that biomass from native forests products will no longer qualify for renewable energy certificates. This is puzzling. In our case, we were proposing a biomass plant at Southwood, using wood that would otherwise have been burnt on the forest floor. We estimated the plant had the potential to reduce smoke from regeneration burns by up to 70 per cent. In our case biomass had the potential to reduce smoke nuisance, reduce carbon emissions, create jobs, create wealth and strengthen Tasmania's renewable energy credentials. I will be keen to learn more about why the government has taken the decision it has. It appears bizarre that in a statement about reducing carbon emissions, a government would appear to oppose a renewable energy source that offers potential for base load power.
The $946 million Biodiversity Fund on the surface appears to deliver good outcomes, but we perceive there may be a risk that some environmental groups will lobby for the money to be used to lock up native forests. That would be at odds with good climate change policy. The Intergovernmental Panel on Climate Change nominated sustainable forestry as having the greatest climate change mitigation potential.
We will have more to say on the carbon tax when we are across all the detail.
Thanks again for your positive feedback to last Friday's Branchline and I hope today's answers some of the questions you might be asking.

Until next time,

Bob Gordon
Managing Director
Forestry Tasmania



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