Tasmanian pulp mill deals out record contract
Forestry Tasmania said its wood supply contract for Gunns’ proposed pulp mill is the most significant deal it has ever struck, according to an online ABC report.
Forestry Tasmania agreed to supply Gunns with 1.5 million m3 of plantation and native forest timber a year for 20 years for about $350 million.
Hans Drielsma from Forestry Tasmania told the ABC the contract stipulates if the market base price for pulp wood falls by 1%, the price his company receives from Gunns will drop by only three-quarters of a per cent.
Dr Drielsma said if the price increases by 1%, Forestry Tasmania’s return will go up by one-and-three-quarters of a per cent.
“When things are good, we get a really good return, and that means that you know the company can afford it because, when things are good they should be making a reasonable return, and then we get a really sort of extra return,” he said.
“When things are not so good, our losses are somewhat attenuated so we feel that that provides, you know that’s a pretty good buffer.”