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OneFortyOne licences end for two Green Triangle sawmills

Cameron MacDonald

Two family-owned sawmills remain in the dark as they wait for official tenders to be opened. It comes following the licences between the sawmills and OneFortyOne coming to an end on 30 June this year with the forest plantation owners reiterating it will not automatically renew the contracts. Source: The Border Watch

These licenses include the two sawmills in Mount Gambier/Berrin which employ a total of 130 personnel and processes 165,000 tons of material per annum.

OneFortyOne Executive General Manager Cameron MacDonald said in October 2021 the plantation communicated its Green Triangle Forest Resource outlook to customers and stakeholders.

“In that communication we committed to run a market tender for any surplus volumes that might become available during the period to June 2025,” Mr MacDonald said.

“In line with this commitment, we have already informed customers that we will be running a market tender shortly for medium large diameter sawlog for one year of volume through to June 30, 2025.”

Mr MacDonald said there were several other forest growers in the Green Triangle region and OneFortyOne “understood a competitive market tender for significant volumes” was recently completed for the “near to medium” term while noting a number of processors were successful in securing fibre.

South Australian Timber Processors Association Chief Executive Officer David Quill said the main concern was that the sawmills had been advised there would be a reduction in June this year with uncertainty as to what alternatives there would be.

“The reasoning behind the reduction is essentially with ongoing inventory of the plantation and previous sales, whether they went to domestic or overseas markets, previous sales have diminished the availability,” Mr Quill said.

He said exportation of sawlogs had also “played a huge part” in the issue of it being the material needed by local sawmills.

OneFortyOne ceased exporting sawlogs in 2017 and claimed it would not resume until 2025.

“The growers here have ceased exporting but there are other growers who may not have ceased,” Mr Quill said.

Mr Quill and parties involved have also protested against the 2017 decision made by the Australian Competition and Consumer Commission supporting OneFortyOne’s purchase of the Jubilee Highway sawmill.

The ACCC announced it would not oppose OneFortyOne’s purchase of the sawmill despite concerns expressed by industry participants about the proposed transaction.

The ACCC concluded it would be “unlikely to substantially lessen competition”.

Mr Quill said the ACCC was contacted because the parties involved thought OneFortyOne was affecting the competition with the two sawmills at risk and asked the ACCC to revisit the situation.

He said the State Government could also assist in securing the future of the mills by revisiting the lease agreement with OneFortyOne which was signed in 2012.

“I agree the government is limited with their intervention, but limited intervention is better than no intervention,” Mr Quill said.

“I believe the government could revisit the lease agreement of the forest and look at potential clauses which could give the forest owners flexibility because it is not set in stone and there is still hope for the two sawmills.”

He said the important thing people needed to realize at the moment was that trees continued to grow all the time and as the housing market eased the supply of trees did also.

“This could also give the potential for the release of more sawlog,” Mr Quill said.

“I do believe one of the sad things was the Legislative Council inquiry into the timber industry wasn’t published before the government went into caretaker mode as well because I believe had it been published then; things would have looked at more favourably.”

He said parties involved had spoken to previous and current state governments with the discussions indicating there was an opportunity for some relief from the situation.

“This is something which can be avoided, should be avoided, and I believe could be avoided,” he said.

“I also believe there’s enough time and all parties concerned have the authority and the ability to keep the situation at bay.”

Mr Quill said the various parties needed to review the overall situation and “forget about the political or business focuses” and predominantly think about the region and its continued sustainability for the future.

“These sawmills hadn’t been built up out of nothing,” he said.

“They are here for future generations, and this isn’t something we should just ignore.

“The trees were planted, and the forests were grown to benefit South Australia.”

Minister for forestry Clare Scriven said there was a huge demand for timber nationally and internationally following the 2019-2020 bushfires in New South Wales and Victoria which increased the pressure on timber supply.

“This has led to intense competition for timber resources,” Ms Scriven said.

“OneFortyOne’s lease with the South Australian government has extensive conditions and requirements designed to ensure the plantation resources continue to generate benefits for the South Australian economy.”

She said this included the plantation’s match to Forestry SA’s level of planned viable domestic supply, processes for uncontracted sawlog sales where local sawmillers were able to compete with exporters on price, no restriction on the length of contracts for local sawmillers or sawlog contracts not to exceed two years and annual reports to the government on how conditions were met.

“OneFortyOne’s compliance with its contract conditions is monitored closely by the State Government with investigations and reviews undertaken regularly,” she said.

“I have sought advice from the ACCC about any potential parameters which could be put in place to boost timber access for local processors and met with SATPA … as the State Government is keen to look at ways to improve accessibility of log supply for small-scale timber processors.

“The aim is to increase timber supply in the region, diversify farm incomes, drive further regional investment by the forest industry and provide additional economic stimulus for regional communities.”