pressure mounts over new gunns offer, page-2

AFR Street Talk

PUBLISHED: 13 Sep 2011 PRINT EDITION: 13 Sep 201113 Sep 2011
Edited by Sarah Thompson, Christine Lacy and Stephen Shore
This week has the potential to be a big one for Gunns ? if it accepts the second compensation package put forward by the Tasmanian government late last Friday.
As pressure mounts on both parties to strike a deal, in accepting the proposal Gunns would be fully removed from native forest logging for good. A deal would also remove
some of the sovereign risk overhang that is preventing a possible partner from signing a joint venture deal for the $2.5 billion pulp mill project that Gunns is desperately
trying to get over the line.
The timber company?s major Japanese customers such as Nippon Paper Industries, Oji, Chuetsu and Itochu (Marusumi) are not likely to partner it. Now major pulp mill
operator Asia Pacific Resources International Ltd (APRIL) has also ruled itself out, telling Street Talk ?the company has no specific plans in Australia?. APRIL is a producer
of fibre, pulp and paper, controlling one of the world?s largest pulp mills in Riau, Indonesia.
Gunns partner is likely to be Chinese given that country is starved of wood and pulp and an equity partnership would secure supply.
Since Gunns has zero experience in running such a project, securing a partner with pulp mill knowledge is important. That said, Gunns still has pulp mill guru Finland?s
Timo Piilonen on the roster, and has been focusing on securing environmental permits. Gunns may round its week off with an answer from the Environmental Protection
Agency which is now deciding whether the state-issued permits are valid.

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