Gunns : Forest Agreement Negotiations

Tasmania, Australia, Aug 18, 2011 - Gunns Limited Managing Director, Mr Greg L'Estrange, today welcomed the Tasmanian Government's decision to appoint a probity auditor to review Gunns' contracts but sought assurances that the process would be expedited to end the onerous uncertainty the decision has created.

Mr L'Estrange said the transparency that an audit process should bring was welcomed but was concerned with recent comments made about Gunns involvement in the Forest Agreements process.

"We feel misled. We were asked to take part in a process to end the 30 year conflict over Tasmania's native forestry," Mr L'Estrange said.

"When we made a decision early in 2010 that we would exit the native forest industry to focus on our plantation strategy, there were two plain choices: sell our businesses as going concerns for material value, or seek to assist in the restructure of the native forest industry through the Forest Principles process," he said.

"Gunns decided in good faith to go through what we expected to be a transparent process to bring to an end what was essentially an ongoing battle over native forests, to provide the balance for a continuing industry and a conservation outcome."

"Having been at the epicentre of that conflict for many years, we decided that it wasn't in the best interests of Tasmania to hand the poison chalice to someone else. We could have easily sold those native forest businesses and gotten on with building a pulp mill."

"But we were encouraged by all of the parties to stay in there with the explicit understanding of funding for a smooth transition out of native forestry."

"Our position from the start was that we were happy to be party to the process, and we have said from day one that we would stay the course if our employees, contractors and shareholders were fairly compensated."

"There are precedents in most other states where this has been done in a fair and objective manner."

"We chose to stick with an open, collaborative process and now it appears that we are being punished for that," he said.

Mr L'Estrange urged the Premier and the Government to stick to commitments made, especially in relation to timing.

"When the Inter-Governmental Agreement was announced, Ms Giddings said it would take seven days to resolve the financial outcomes. It has now taken two weeks to reach what is still essentially a non-decision," he said.

"We have contractors out there waiting for a decision on this, workers waiting to see if Tasmania is going to be mature enough to manage the restructure of the native forest industry and to develop a world scale plantation business."

"There has been a reference to forest workers being angry about Gunns' decision. It is my understanding that the union poll earlier this year around the forest agreement found overwhelming support for action."

Mr L'Estrange said he would also like to remind the Government that a decision to exit the native forest industry was directly linked to Gunns' ability to bring the Bell Bay pulp mill project to a reality.

"The pulp mill is the largest single private investment in Tasmania, a venture whose success is dependent on a plantation-only environment. Tasmania's global reputation needs a plantation industry, not a continuation of the conflict," he said.

Gunns is giving up over 3,500 kilometres of forest roads, which Gunns has constructed on public land, licences for over 210,000 cubic metres of high quality sawlog per annum and two million green metric tonnes of pulp wood per annum.

Given this background, to characterise Gunns involvement in this process as a "grab for cash", as propounded by some participants in the debate, is both misleading and offensive.