Closure talks at Australian Sustainable Hardwoods are “on hold” through February as timber supply negotiations with the State Government and VicForests continue.
ASH met with Agriculture Minister Jaala Pulford and Construction, Forestry, Mining and Energy Union representatives in Melbourne on Monday to put forward a plan to keep the Heyfield mill operational.
It follows state-owned VicForests offering ASH a reduced volume of timber beyond June this year, when their current long-term contract expires, putting the business and some 250 direct jobs at risk.
Hermal Group chief executive Clinton Tilley said ASH had agreed to a four-week period of negotiation in which “the discussion around closure is on hold but it hasn’t gone away with 7 March being D-day”.
ASH proposed a 25-year plan involving evacuating its current operations in the 1939 regrowth plantation, which is also inhabited by the endangered Leadbeater’s Possum.
“We put a proposal to the State Government around a 25-year plan for the industry to migrate into plantation over that time-frame that would be owned by state forest or they could sell it onto a third party during its lifetime, then it becomes a managed asset in the long term,” Mr Tilley said.
“What we’re trying to do is protect the environment and give certainty of supply and confidence for our workers.”
The migration would be to a low or no conservation area of forest, where ASH would deal with a smaller diameter log which requires different equipment and sawing techniques.
Mr Tilley said the transition would require a major re-tooling at the Heyfield mill and ASH was seeking State Government support for an estimated $40 million overhaul of the facility.
This would include the construction of a new green mill for about $28 million.
While the long-term plan was “well-received”, Mr Tilley said ASH survival would be contingent on securing short-term timber supply over the next five years while they transitioned the industry.
“If we don’t have our minimum supply need met through this period of transition, we will be forced to close,” he said.
“The government is pursuing that with VicForests and looking at the assumptions in the modelling to see if there’s anything there that can be realistically changed or modified.”
ASH currently works within six per cent of the total Central Highlands forest area, and harvests less than 0.1 per cent per year.
Mr Tilley called on the State Government to undertake a review of Leadbeater’s Possum numbers in line with their pledge to do so when the population reached 200 colonies.
He said there were currently more than 430 colonies of the species and the review had not yet occurred, meaning portions of the forest remained locked up.
“We’re past double what the old threshold was to have a look and no-one’s had a look and seen how can this be done in a safe and effective manner for the Leadbeater and how can it be done that we can keep the industry open while we transition out of the ‘39 regrowth,” Mr Tilley said.
“Realistically that’s the key issue.”
Mr Tilley said he was “cautiously optimistic” of brokering an agreeable outcome and that ASH was “prepared to compromise to have a future”.
“Unless we change we’re not going to be here in 10 years regardless. You could win the fight for another three years, but three years doesn’t solve this industry, it needs a 25-year plan,” he said.
“It’s like the Rolling Stones said, ‘you can’t always get what you want but sometimes you get what you need’.”
Both ASH and the State Government reported goodwill around the table.
“The meeting was constructive and focussed on the need to identify viable arrangements for the mill which protect local jobs, given reduced timber availability,” Ms Pulford said.
“All parties have committed to work together in good faith and with the necessary urgency throughout February.”
The ASH board will reconvene on 7 March.