The Age (Business section), June 12, 2006
Victoria's forestry industry has launched action against VicForests' latest timber auction, saying it is unfair and produces outcomes that threaten parts of the industry.
The director of operations at the Victorian Association of Forest Industries, Nick Murray, said many of the prices reached in the auction were unsustainable.
Some of the state's best and most progressive value-adding sawmills refused to pay the high prices, and were feeling threatened, he said.
VAFI has lodged formal grievance procedures with the auction manager of online auctioneers BOMweb. The grievances will have to be heard before contracts arising from the auctions can be finalised.
The grievance procedure involves representatives from VicForests, BOMweb and an independent probity officer making a decision on the complaint.
The auction was held last week, the second in the new timber sales system that VicForests, the State Government's commercial forestry arm, will progressively introduce over the next decade.
The current system, where sawmills receive long-term licences and VicForests sets the prices for the various sawlog grades, will be progressively phased out. All native forest timber will be sold at auction by 2015.
The first auction in April was for 174,100 cubic metres of sawlogs, while the second was for about 700,000 cubic metres.
Mr Murray said the auction did not operate as buyers had been led to believe. He said it was far more complex than the first auction, with a combination of lots creating an incredible number of variables.
"There are a number of aggrieved buyers and bidders, both successful and unsuccessful, hit by the vagaries of the system," he said. "Many felt compelled to pay more than they would have thought, and others missed out on buying wood as a consequence."
Successful buyers were believed to include Neville Smith Timber Industries, Gould Sawmills, Auswest and Fenning Bairnsdale. Those missing out are believed to be leading players such as McCormack Timbers, Drouin West Timber and Black Forest Timbers.
Mr Murray said several prices, including for mountain ash, were excessive at 20-50 per cent above the administered price delivered at the mill gate.