you may have your wish sooner

Finnish firm UPM eyes stake in Gunns pulp mill
Matthew Denholm From: The Australian February 09, 2011 12:00AM

A POTENTIAL backer has emerged to resurrect the Gunns pulp mill, with Finnish pulp giant UPM revealing it has been investigating a joint venture in the project.

UPM, which has production plants in 15 countries, confirmed to The Australian it was "studying" the $2.3 billion Gunns project as a potential investment opportunity, but insisted no commitment had been made.

There is speculation in political circles that UPM will be the joint venture partner and that Gunns is redoubling efforts to obtain a "social licence" from the local community to clinch the deal.

Gunns has in recent months tried to engage mill opponents in dialogue, promised design changes, sought to finalise federal approvals and continued to pursue Forest Stewardship Council certification.

Helsinki-based UPM, which has pulp, paper, energy and engineering businesses throughout the world, confirmed it had been considering the Gunns project.

"UPM is studying opportunities and getting to know local circumstances in different parts of the world on a regular basis," a UPM company spokesman said.

"We have also studied the Gunns project. However, UPM is not committed to any specific plans in Tasmania."

Gunns chief executive Greg L'Estrange would not comment on UPM's involvement, citing confidentiality arrangements.

But he said he was confident the project was, after six years of development, controversy and setbacks, close to getting off the ground.

Gunns' main remaining hurdles, he said, were securing the last federal environmental approval -- for marine effluent -- and obtaining a "social licence" from the local community.

To help both aims, Mr L'Estrange revealed Gunns had reduced by 40 per cent the amount of chlorine dioxide to be used in the bleached eucalypt plant, reducing chlorine discharge.

Gunns has spent $5 million on detailed hydrodynamic studies in an attempt to prove to the commonwealth that 64,000 tonnes of effluent to be released daily into Bass Strait will not harm marine life. Federal Environment Minister Tony Burke must make a decision by March 4.

Gunns has several indirect links with UPM. Gunns' pulp mill project manager, Timo Piilonen, was formerly a senior manager with Botnia, which built and owned a pulp mill in Fray Bentos, western Uruguay. UPM was a major shareholder in Botnia and in late 2009 became 91 per cent owner of the Fray Bentos mill where Mr Piilonen had worked.

UPM has a pulp and paper mill in Lappeenranta in Finland, where former Gunns chairman John Gay and former Tasmanian treasurer Michael Aird visited in 2009 to spruik the Tamar mill to potential investors.

Gunns has chosen Austrian pulp mill plant supplier Andritz, which was involved in building the Fray Bentos mill, which, like Gunns' proposed mill, is a bleached eucalypt plant.

There is considerable community opposition to the Gunns mill, due mostly to air pollution concerns in a food and wine region, and outrage at state approval being fast-tracked outside normal planning processes.

Mill critic, businessman Geoff Cousins, said he had urged Mr L'Estrange to hold public hearings into the mill. Mr L'Estrange rejected the idea, saying the current consultation process was a "hybrid" of such a process.