We are moving towards the end game of the Great Tasmanian Pulp Mill saga with Gunns shares suspended, the unpaid creditors baying for blood, a shareholder class action in train and the Pulp Mill Permits about to be extinguished.
This essay relates to the Pulp Mill Permits and the looming deadline for their expiry. Money spent on acquiring the Permits cannot be reallocated as a book entry into money expended on construction. Without the Permits, construction cannot commence and if construction cannot commence no money can be spent. Therefore permits only allow construction to commence and their acquisition is separated as a cost from construction.
It seems probable from Deputy Premier Green’s comments on ABC Radio that he and his Government are attempting to project a view to the public, on behalf of Gunns Limited, that although construction of the Mill has not commenced a substantial amount of work, hence construction, has been completed by virtue of obtaining the Permits.
When a planning permit is issued by a planning authority it is conditional that any proposed development commence within a specified time; in Tasmania a period of two years, and that a substantial commencement the work had been carried out prior to that date. The work undertaken must constitute a substantial commencement, not a mere appearance of work or money spent on the permit application. In that circumstance, a planning authority can issue only one extension of time and then only for a further 2 years.
In 2009 the then Minister for Resources, Llewellyn, brought a Bill before the Tasmanian Parliament to amend the existing Pulp Mill Assessment Legislation due to poor planning by Gunns, the EPA and the Government. This Bill retrospectively provided for a two year extension of the original date of expiry for the Pulp Mill Permit.
The aim of the Pulp Mill Assessment Amendment (Clarification) Bill 2009 was to provide certainty as to the date when the Pulp Mill Planning Permits would lapse, should Gunns fail to substantially commence the development and construction of a bleached kraft pulp mill in Northern Tasmania.
Senior Regulatory Officials were concerned as to was there a Mill permit expiry date or not? This clarifying amendment was passed several months after the Permit Date in the original Act had expired.
There can be no question there was no substantial commencement of the Mill by August 2009 and all costs had only been expended on permits; hence the requirement for a Clarification Bill.
The current Pulp Mill Assessment Act (2007) legislation, as amended in 2009 now provides in Section 8 (4) -
“The Pulp Mill Permit lapses if the project is not substantially commenced before the end of the period of 4 years commencing on the date on which the Pulp Mill Permit comes into force”
The fact sheet explaining reasons for the Bill stated that -
The amendment to the Pulp Mill Assessment Act means that regulators can be certain that, should Gunns not have substantially commenced the project by 30 August 2011, the Pulp Mill Permit lapses and Gunns’ authority to build and operate the pulp mill is extinguished.
Four years is considered a reasonable period of time given the size and considerable complexity of the project and lapsing provisions in other legislation.
The fourth year anniversary date of 30 August 2011 for the Pulp Mill Permit Amendment is now upon us.
So Minister Green’s comments are misleading, the 2009 Act passed by his Party confirms that there will be extinguishment of the permit on that date as the permit lapses unless as a matter of fact the project has substantially commenced. The matter now rests with the Regulatory Officers as to what test will they now use to determine if the project has lapsed - the dollar value of completed contracts which is virtually nil or a visual test.
Does a Portaloo or a Site Office qualify?
The fact sheet also drew attention to the permit obligations in regard to the Pulp Mill Assessment Act are the same requirements as provided for under the Tasmanian Land Use Planning and Approvals Act 1993(LUPA). The PMAA also provides that words under its act have the same meaning as under LUPA.
Therefore there is absolutely no possibility for confusion in the mind of the Minister as to what is meant by substantial commencement. Commencement means work commenced on the Permit site that is measurable both in dollar terms contracts and work executed.
When the Permit has lapsed there is no authority for Gunns or any of its agents to undertake work in accordance with the Permit on the Pulp Mill site.
The issue is: Will Gunns now announce that its Mill Permit has lapsed and as a consequence inform the Australian Stock Exchange prior to its shares being re-listed. Without a potential pulp mill Gunns shares would be worthless.
Or will it carry out work illegally on the sites listed under the Mill Permit after August 30th. Hoping that no one will challenge them.
Will the Tasmanian Government now announce that it has ceased all work associated with the Mill Permits as part of its commitments regarding “a line in the sand” ?
Will the State Regulatory Officers whose function was the monitoring of work carried out under the statutory obligations pertaining to the Permit now announce that the Permit has been extinguished .
The aim of the Clarification Bill was in the event that the project time had elapsed that any adjudication was to be determined purely and simply in relation to the wording “Substantially Commenced”.
Since the issue of the Permit what work has been carried out and completed under the new Bill since 2009? In the context of a 2.3 billion dollar project one would expect all civil works associated with roads, access ways, drainage, sewerage and power distribution to have been completed.
The substations, pulp mill, steel erection, warehouses and administration facilities should be well underway in accordance with the various contracts that have been let. None of this has occurred.
The Company should take notice that this wording is precise and explicit and as a result there is no way that the Pulp Mill permit will not lapse on 30 August 2011.
Any action Gunns takes to exercise a right under the expired Permit after August 30th will be opposed, if required through the Courts.
Tasmanians have had enough of this corrupt process.
Garry Stannus recently on Tasmanian Times noted that the High Court of Australia had dealt with the issue of ‘substantial commencement’ .....
“... [a substantial] commencement is not merely evident, but is substantial, that is, of considerable amount ... A substantial commencement involves a commitment of resources of such proportions relative to the approved project as to carry the assurance that the work has really commenced ... the construction of the slab was not a substantial commencement ... the concrete slab was not a substantial part of the approved work of six town houses costing an estimated ... ”
When will the Minister be requesting its State regulatory authorities to tell him that they have advised Gunns Limited that the Mill Permit has lapsed.
Or is this another case of our Parliament is be asked by Labor for a further retrospective amendment. This will provide an opportunity to bring down the Labor Government.
Surely the Liberals will not be so stupid as to vote themselves out of power by voting with Labor to extend the Permits thereby denying Kim Booth to vote the Pulp Mill off the agenda.
• Mill sales a blow to North-East
BY ALISON ANDREWS CHIEF REPORTER
12 Aug, 2011 12:00 AM
TIMBER company Gunns has let the North-East down with the sale of its two former Scottsdale sawmills, says Dorset Mayor Barry Jarvis.
Cr Jarvis said yesterday it was frustrating to learn that Gunns had put the two Ling Siding sites up for sale after stripping valuable assets from them.
“I have learned today that key infrastructure including moulders, kilns and buildings will be removed from the sawmill sites at Ling Siding,” he said.
“I can only conclude that they are looking to limit any potential competition to the company’s Bell Bay mill by lessening the chances of a new forestry based operation being established on the sites.”
That did the North-East no favours, he said.
“The council has (already) had expressions of interest from veneer and engineered timber interests who are looking for viable sites in the North-East,” he said.
Shepherd & Heap director Andrew Heap confirmed yesterday that the two Scottsdale mill sites and four other Gunns’ properties were officially on the market.
He said that the sales would not include equipment and infrastructure or any attached wood allocations.
The other properties to be advertised in tomorrow’s newspapers besides the Scottsdale Ling Siding mill site and the Scottsdale Tonganah mill site are the Ling Siding office site, on four titles; the Somerset mill site, on seven titles; the Deloraine mill site, on one title, and the Western Junction mill site, also on one title.
• Triabunna 13, Gunns end litigation
A group of 13 forest campaigners have today reached a settlement for all current legal actions with forestry company Gunns Ltd.
The Triabunna 13 group were sued by Gunns Ltd. in 2009 after an anti-logging action at the company’s woodchip mill on Tasmania’s east coast. The group subsequently launched a legal action against Gunns Ltd. Both parties have today agreed to settle all litigation. The terms of the settlement are confidential.
“The Triabunna 13 are pleased that all litigation has been resolved to our satisfaction. This case arose from our efforts to draw attention to the destruction of Tasmania’s high conservation value forests. We now hope to move forward to a time where those forests are given the protection they deserve,” said Triabunna 13 spokesperson Ali Alishah.
“The settlement of these legal actions allows for productive dialogue to proceed between the two parties on progressing an industry transition out of native forests” said Mr Alishah.
“We hope that this process will help to secure the urgently-needed protection of Tasmania’s high conservation value forests. However, the Triabunna 13 remains committed to taking peaceful direct action to protect Tasmania’s threatened high conservation value forests” concluded Mr Alishah.
• Homeless animals move into Harvey Norman store.
Today a group of native Tasmanian animals including Tasmanian devils and quolls moved into the Harvey Norman stores in Hobart.
Eight conservationists from Still Wild Still Threatened are protesting at the store, calling for Harvey Norman to stop sourcing native forest products. One protestor dressed as a Swift Parrot has climbed a light post outside the store, displaying a banner reading “Stop selling native animal habitat.” Inside the store quolls and a Tasmanian devil are reclaiming furniture that is made out of their native habitat.
“These threatened and endangered animals have been left homeless after their prime habitat areas in Tasmania’s native forests were destroyed to make furniture for Harvey Norman stores” said Miranda Gibson, spokesperson from Still Wild Still Threatened. “Endangered species, with the support of the Tasmanian community, demand Harvey Norman cease selling products made from their native forest habitat.”
“Surveys by Still Wild Still Threatened have found evidence of Tasmanian devils and spotted tail quolls in the forests of the Styx, Tyenna and Counsel. These high conservation value forests are being ripped apart by industrial scale logging. The wood is then shipped to China to be made into furniture and shipped back to be sold in stores like Harvey Norman” said Ms Gibson.
“We are calling for Harvey Norman to stop using native forest products and change their procurement policies to only source wood from sustainably managed plantations or recycled timber” said Ms Gibson.
Still Wild Still Threatened is a grassroots community organisation campaigning for the immediate protection of Tasmania’s ancient forests and the creation of an equitable and environmentally sustainable forestry industry in Tasmania.
PO Box 295. South Hobart TAS 7004
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• Gunns accused of anti-competitive behaviour
The Tasmanian timber company Gunns is being accused of trying to stop competitors from taking over the mills it has put up for sale.
The Ling Siding mill at Scottsdale is one of five northern mills Gunns is selling after deciding to end its native timber business.
Michael Brill leases the mill and employs about 30 people.
“In as far as Dorset’s concerned and the north-east, we’re pretty much the last man standing,” he said.
Mr Brill wants to buy the mill but believes Gunns is trying to make it too expensive for a competitor to take it over by selling the equipment.
Dorset Mayor Barry Jarvis says it should be left as it is.
“Dorset is now probably the most vulnerable for people leaving the area,” he said.
Gunns is in an indefinite trading halt while it waits for an announcement on compensation under the $276 million forest deal.
First published: 2011-08-12 03:06 AM
• Gunns post an update re trading halt:
The update states Gunns are waiting on clarification from the State Government. Gunns may be waiting a long time for so called ‘compensation’ so it is surprising that ASX accepts such a lame excuse.
There is an opportunity for ordinary folk to contact the ASX https://myasx.asx.com.au/home/feedback.do?referred=http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=GNS and fill in the complaint box directing it to ‘surveillance or market intelligence or other [for re-direction]. Tell the ASX that the forest process could take a year to finalise and demand Gunns remove its trading halt to allow shareholders to react to Gunns performance etc etc.
If you want to phone
Customer Service. Hours are 8:30am-6:00pm Sydney time.
131 ASX (131 279) Phone from within Australia (cost of a local call)
+61 2 9338 0000 Phone from Overseas
02 9227 0885 Fax (Excluding company announcements)
Company Announcements Office. Hours are 8:30am-7:30pm Sydney time (8:30am-8:30pm during Daylight Saving Time). 1300 135 638 Fax from within Australia
• Code Green
Homeless animals move into Harvey Norman stores.
Media Release: 13-08-2011
Today a group of native quolls have moved into the Harvey Norman stores in Tasmania’s north.
15 conservationists from Code Green are protesting at Harvey Norman outlets across the state’s north, calling for Harvey Norman to stop sourcing native forest products. Two protestors dressed as native animals have climbed light posts outside the Marine Terrace store in Burnie, displaying a banner reading “HARVEY NORMAN: PROFITING FROM ECOCIDE”. Inside the store a quoll is reclaiming furniture that is made out of its native habitat. In the Charles Street store in Launceston another quoll is reclaiming furniture made from its native habitat.
“These threatened and endangered animals have been left homeless after their prime habitat areas in Tasmania’s native forests were destroyed to make furniture for Harvey Norman stores,” said Code Green spokesperson Robert Pergl.
“Endangered species, with the support of the Tasmanian community, demand Harvey Norman cease selling products made from their native forest habitat,” said Mr. Pergl.
“High conservation value forests that make up our native wildlife’s habitat are being ripped apart by industrial scale logging. The wood is then shipped to China to be made into furniture and shipped back to be sold in retail outlets like Harvey Norman,” said Mr. Pergl.
“We are calling for Harvey Norman to stop using native forest products and change their procurement policies to only sourcing wood from sustainably managed plantations or recycled timber,” said Mr. Pergl.
Media Update: 13-08-2011
Homeless animals arrested for reclaiming habitat in Harvey Norman stores.
Today a group of native quolls moved into the Harvey Norman stores in Tasmania’s north. 15 conservationists from Code Green protested at Harvey Norman outlets across the state’s north, calling for Harvey Norman to stop sourcing native forest products.
Two protesters dressed as native animals climbed light posts outside the Marine Terrace store in Burnie, displaying a banner reading “HARVEY NORMAN: PROFITING FROM ECOCIDE”. Inside the store a quoll reclaimed a bed made from wood sourced from its native habitat by chaining herself to the bed. The quoll was arrested and charged with trespass and another unspecified charge. She has been denied bail and remanded to appear before the Burnie Magistrates Court. This is extremely excessive behaviour by Tasmania Police against a peaceful demonstrator who has not had any prior arrests or confrontations with the law. Four other protesters, including the two quolls that displayed the banner, were given move on orders and excluded from the premises for a period of 8 hours to which they complied. They were informed they would be charged with trespass by summons at a later stage.
In the Charles Street store in Launceston another quoll also reclaimed a bed made from its native habitat by chaining herself to a bed. Outside the store 10 demonstrators displayed a banner reading “PROFITEERS OF EXTINCTION”. The quoll was arrested and charged with trespass and then released. 10 demonstrators were given move on orders and excluded from the area for an unspecified period of time to which they complied.
“The draconian nature of the treatment of peaceful demonstrators by the Burnie branch of Tasmania Police is an extreme misuse of Police powers. Just last week two peaceful activists were handed suspended sentences for standing up for the future of Tasmania. This sort of biased, unjust and unprofessional conduct will not be tolerated by the Tasmanian community,” said Code Green spokesperson Ali Alishah.
“High conservation value forests that make up our native wildlife’s habitat are being ripped apart by industrial scale logging. The wood is then shipped to China to be made into furniture and shipped back to be sold in retail outlets like Harvey Norman,” said Mr. Alishah.
“We are calling for Harvey Norman to stop using native forest products and change their procurement policies to only sourcing wood from sustainably managed plantations or recycled timber,” said Mr. Alishah.
Media Update: 13-08-2011
Peaceful demonstrator, without priors, denied bail and held over weekend for Trespass
The peaceful member of non-violent community action group CODE GREEN, who appeared in the Burnie Magistrates Court this afternoon, has been denied bail by the presiding magistrate and will be transported to the Launceston remand facility to be held over the weekend. She will be transported to Burnie on Monday morning to appear in the Burnie Magistrate’s court.
The protester has no priors and showed exemplary conduct during the course of her demonstration. She is absolutely committed to non-violent peaceful direct action and hence poses no risk to the public. There is absolutely no reason to suggest that she would not have complied with bail conditions upon release.
“This is an absolutely appalling breach of people’s civil liberties. It is well within the community’s rights to stand up to defend their unique high conservation value native forests and Tasmania Police have a commitment to employing an unbiased and professional approach to law enforcement,” said Code Green spokesperson Ali Alishah.
“The “wild west” tactics being employed by the Burnie branch of Tasmania Police are in stark contrast to the civil and professional attitude exhibited by the Launceston branch on the same day. These shameful measures aimed at intimidating activists and silencing community concerns by force will not deter us in our struggle to protect the irreplaceable native forests of Tasmania,” said Ali Alishah.
“The draconian nature of the treatment of peaceful demonstrators by the Burnie branch of Tasmania Police is an extreme misuse of Police powers. Just last week two peaceful activists were handed suspended sentences for standing up for the future of Tasmania. This sort of biased, unjust and unprofessional conduct will not be tolerated by the Tasmanian community,” said Mr. Alishah.
“This is nothing short of squashing the democratic rights of Australian citizens,” said Mr. Alishah.
• In his own words, Gunns boss Greg L’Estrange:
It’s just business: L’Estrange Gunns CEO has eyes on mill prize
Posted on August 13, 2011 by gunnsblog
The Examiner, 13 August 2011
GUNNS CEO Greg L’Estrange talks about his time before taking on the top job at Gunns and what the future holds.
JAWS dropped. Here was the boss of the country’s toughest timber company using a national industry forum to declare the forest wars were over and that greenies were the winners.
“Hate,” Greg L’Estrange recalls of his colleagues’ reaction.
“Anger. ‘You’re abandoning us’ – all of those issues. But you can only get there and say these are the facts, try and deal with them.”
Nearly a year later, Mr L’Estrange does not think the industry has moved on.
“You look at all the rhetoric that’s going on around the forests debate now. They haven’t moved beyond the anger stage. Where this is purely business,” he says.
So it seems with the managing director of Gunns, at lunch even. No hatted restaurant; no private butler.
We have cafe sandwiches with paper napkins at a coffee table in a sparse office in Launceston. Great.
“What did Gordon Gekko say? ‘Lunch is for wimps’?” If there wasn’t a twinkle in Mr L’Estrange’s eye as he says it, this meal would begin to pall.
I pick up the pressed turkey, cranberry and lettuce on mixed grain. The Cassandra of the timber industry nibbles at ham salad on white, and sips a cuppa.
We revisit the Forest Industry Development Conference last September where he said: “We have lost the public debate and the support of the broader community … the industry has been out-thought and outplayed.” Gunns was exiting native forest logging.
In Tasmania, the awful truth is that in the past three years, half the island’s forest workers have lost their jobs.
Australian National University research shows losses are accelerating and many blame Gunns for deserting them.
Mr L’Estrange has some explaining to do. Can Gunns, the one-time 800-pound gorilla, survive its current financial pounding?
How convincing can Mr L’Estrange be about a pulp mill that still doesn’t have its $2.3billion in financing, after nearly seven years?
And why should the industry trust someone who just sold a strategic asset to those same greenies?
Why on earth did Mr L’Estrange come to Gunns at a time when it was cast as Tasmania’s “evil empire”?
“Ah, yes. I ask myself that too many times,” he said.
Turns out it’s partly in the CV, and partly in the blood.
L’Estranges have been laid to rest among the red soil graves of Condobolin cemetery in central-western New South Wales since 1881.
Greg L’Estrange grew up on a modest sheep and wheat farm and went to the local school. His parents, Ken and Novelle, taught him two things, he says.
“You have to be fair. And your word is your bond. So when you do a deal, you do a deal. And you honour it.”
But being the third son on a farm, he had to find somewhere else to deal. He joined the Rural Bank of NSW, moved to Sydney at 22, and soon took a job with a venerable timber merchant, Allen Taylor & Co.
After Taylors was acquired by Boral, Mr L’Estrange went north to run its Queensland operations and found himself in his first environmental stoush: over logging on Fraser Island.
By the late 1980s, the chainsaws on Fraser were into brushbox and satinay – gorgeous rainforest timbers from big trees.
“It was a very bitter battle, eventually resolved during the Wayne Goss (Labor) government, that logging would cease and people would relinquish their concessions.”
He takes two lessons out of that fight.
“I think it was formative that in a conflict, seeking resolution is required.” And second, usefully, that government compensation can be a big help with a transition out of native forest and into plantations.
Fast forward 15 years and he was at the top of CSR Timber when it decided to exit the industry.
Mr L’Estrange completed that task as Gunns was moving into pine and he came to Tasmania to run its timber products group.
At the time, flush with woodchip cash, Gunns was in everything in Tasmania: wine, farms and even a colonial-era historic house.
Mr L’Estrange fishes around for another sandwich. Chicken and sun-dried tomato. I try the brie and something.
It’s history now that during the global financial crisis, Gunns began to hit hurdles, and Mr L’Estrange quickly became chief executive.
Community anger with the company was hot, and woodchip sales cash started to dry up. Gunns began to sell some of the tinsel, but that wasn’t enough for the major shareholders.
Chairman John Gay and board heavyweight Robin Gray were ousted in May last year. Mr L’Estrange was suddenly it.
The remaining board stuck to the possibilities of a pulp mill, though their CEO was less than optimistic.
“At that stage, in my view, the mill had zero chance of getting off the ground,” he says.
So he began to reframe the debate. To him, the crunch had come years earlier.
“The main market for woodchips, Japan, signalled early in the last decade that it was moving out of native- based products and going towards plantations. Made a clear statement.”
Sawn hardwood prospects were no better. “I keep pointing this out: 30 years ago consumption of hardwood in Australia was 3 million cubic metres a year. Last year, less than 1 million.
“Preferences have fundamentally changed. If you look, all the best tree-growing areas in our natural forests are the most appealing for those who don’t want them harvested.”
For him, belling the cat at the September 9 speech was a straightforward move.
“I think that people had been living in denial. They had missed all of these trends.”
It must have helped that Mr L’Estrange was not steeped in Gunns’ history or stifled by the small Tasmanian business community.
As a mainlander on a $1million salary plus bonuses, without even the commitment of share options, was it not easier for him to speak freely?
“I’m just telling it as it is,” he says. “With a degree of honesty. And I think the conversation needed to be had, even if people didn’t want to listen. That’s just the way I am. Probably blunter than I should have been.”
Under him, bushland parcels, hardware, the wine business, walnuts, the historic house and some plantations have gone. Sawmills closed. Even the office we sit in is for sale.
Still, in the face of a soaring dollar and a continuing debt load, Gunns has become a bucket to kick in the sharemarket, a trading halt called at a perilous 20.5 cents.
Where does it end? There’s little appetite for another sandwich as we get to the nub.
“It ends with moving into construction of the pulp mill,” Mr L’Estrange says. Gunns has already sunk $219million into developing the mill and still owns or controls enormous plantations to feed it.
Though “ready” since 2009, the mill still has no financial green light. It must be hard to sustain self-belief in this giant vision.
Mr L’Estrange pauses. “When you work through the project, it is compelling … Australian manufacturing generally doesn’t believe it can be competitive. And in some places we can’t.
“But where we can, we have to try a whole lot harder than we have been. I think this company, and more specifically this project, allows us to do that.”
Meanwhile, he has tried to build a “social licence” for the pulp mill – a loose concept perhaps best defined in this case as too few community opponents to hurt the financing.
He also has to deal with the residual anger of the timber industry; of contractors who found themselves in debt up to their necks when Gunns made the shift out of native forest; and of sawmillers who lost jobs.
This boiled over in one of the more bizarre chapters of the long Tasmanian forest conflict when Mr L’Estrange sold Gunns’ strategic Triabunna woodchip mill to wealthy environmentalists Graeme Wood, of Wotif.com, and Kathmandu founder Jan Cameron.
Even more ironic was the man they chose to run Triabunna – Alec Marr.
The long-time Wilderness Society boss was number one defendant in the Gunns 20 case, a marathon attempt to prosecute green opponents through civil courts launched in 2004. This largely failed, at costs to the company of about $4million.
It’s a measure of changed times that, despite dealing intensively with each other during the Triabunna sale, Mr L’Estrange says he was unaware of Mr Marr’s “number one” position in the suit, and Mr Marr didn’t mention it.
The $10million Triabunna sale drew howls from local timber industry and state government interests who lost the contest.
Mr L’Estrange is unfazed.
He believes the deal allows for the chipper to continue, and Gunns served the industry as well as it could.