CANBERRA (Dow Jones)--Australian Environment Minister Malcolm...

CANBERRA (Dow Jones)--Australian Environment Minister Malcolm Turnbull has indicated he will approve timber giant Gunns Ltd.'s (GNS.AU) planned A$1.7 billion Tamar Valley pulp mill in Tasmania, subject to environmental conditions, the Australian Financial Review reported Thursday.

The newspaper said Turnbull will approve the mill subject to conditions on measuring and dispersing effluent from the mill, outlined in a comprehensive report by chief scientist Jim Peac ock and a panel of experts.

Gunns Chief Executive John Gay has threatened to abandon the mill if Turnbull imposed more conditions on the project, the AFR reported.

A spokesman for Turnbull declined to comment Thursday on whether the environment minister has given Gunns the go-ahead on the project. Turnbull will hold a media briefing in Sydney at 0030 GMT to announce his decision, the spokesman told Dow Jones Newswires.