The Age (Business Section), June 10, 2006
Construction of a $700 million pulp mill at Heywood in Victoria's south-west will get under way by the end of this year after the project received the go-ahead from the Victorian Government.
The mill, 20 kilometres from Portland, will take two years to build and is expected to produce its first pulp by 2009.
It is a sister mill to a proposed pulp mill in Penola, north of Mount Gambier, which is awaiting approval from the South Australian Government.
Together, the two pulp mills represent $1.3 billion in investment, and each will employ 120 people when in full production. About 600 jobs will be created in building each mill.
Woodchips for the mills — 1.4 million green tonnes a year — will be sourced from Timbercorp's blue gum hardwood plantations in the Green Triangle, the fertile region that stretches from Warrnambool in Victoria to Kingston in SA.
The Heywood pulp mill is valued at about $400 million, but the total project will cost about $700 million when other works are included. These include a 120 megawatt, gas-fired power station connected to the SeaGas gas pipeline between Victoria and SA, and upgrades to road, rail and terminals at the Port of Portland.
Both plants will be chemi-thermomechanical pulp (CTMP) mills. CTMP is used to manufacture soft and absorbent tissue, box-board and coated fine paper among other things.
The developer is Protavia, which is backed by an alliance of companies that includes Timbercorp, chemical giant Orica, CellMark, Andritz and Silcar. CellMark is the world's largest pulp and paper trader, Andritz is the world's largest provider of the CTMP technology, and Silcar is a joint venture between German companies Thiess and Siemens.
Project director John Roche said there was huge demand for the CTMP pulp and prices were very high. "It requires much energy to produce, and Australia's energy prices are very competitive," he said.
"We are not competing against Australian electricity prices, but prices in the rest of the world. Only Russia and South Africa are comparable with Australia, but they do not have the same stable political environment." Mr Roche said adding value to the woodchips would be of great benefit to Australia. Woodchips sell for about $150-$160 a tonne, whereas pulp fetches about $800 a tonne. Mr Roche said the pulp would be exported to Taiwan, Korea and China. The two mills are expected to generate export earnings of $700 million a year, which will put a big dent in Australia's annual $2 billion trade deficit in wood products.
Timbercorp's plantation timber is certified by the Forest Stewardship Council.