Identifier
Created
Classification
Origin
09MELBOURNE2
2009-01-06 03:29:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Melbourne
Cable title:  

Tasmania: Controversial Pulp Mill Granted Extension

Tags:  PGOV SENV AS 
pdf how-to read a cable
VZCZCXRO0189
RR RUEHPT
DE RUEHBN #0002 0060329
ZNR UUUUU ZZH
R 060329Z JAN 09
FM AMCONSUL MELBOURNE
TO RUEHC/SECSTATE WASHDC 4847
INFO RUEHBY/AMEMBASSY CANBERRA 3523
RUEHDN/AMCONSUL SYDNEY 2045
RUEHPT/AMCONSUL PERTH 1502
UNCLAS MELBOURNE 000002 

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: PGOV SENV AS
SUBJECT: Tasmania: Controversial Pulp Mill Granted Extension

Ref: A) 08 Melbourne 149, B) 08 Melbourne 144

Summary
-------

UNCLAS MELBOURNE 000002

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: PGOV SENV AS
SUBJECT: Tasmania: Controversial Pulp Mill Granted Extension

Ref: A) 08 Melbourne 149, B) 08 Melbourne 144

Summary
--------------


1. (SBU) On January 5, federal Environment Minister Peter Garrett
granted Gunns Ltd an additional 26 months to overcome ecosystem
concerns surrounding its Tasmanian pulp mill. While financing the
A$2.2 billion (US$1.57 billion) project is likely to be the more
significant obstacle, the extension means that the controversial
pulp mill may again become an important issue in both the 2010
federal and Tasmanian state elections. The announcement is also
further evidence that the Rudd government is focused on the economy,
even if that means offending environmental groups. End Summary.

Conditional Approval Still Faces Important Obstacles
-------------- --------------


2. (SBU) Australian media widely reported on January 5 that federal
Environment Minister Peter Garrett granted logging company Gunns Ltd
a conditional approval to move ahead with its planned pulp mill in
Tasmania. Before opening the mill doors, however, Gunns must
overcome two obstacles. First, it must submit further reports to
the federal government by March 2010 on the run-off impact of the
mill on the nearby Bass Strait's marine ecosystem. Gunns' chief
executive publicly stated that the additional studies will be
completed within 15 months. Second, and perhaps more significantly,
Gunns must secure financing to the tune of A$2.2 billion (US$1.57
billion). Tasmania-based contacts believe that obtaining financing
in a market characterized by depressed pulp prices and tight credit
will prove to be the mill's largest challenge. Uncertainty over
environmental approvals will no doubt add to Gunns' financing woes.


3. (SBU) Greens Senator Christine Milne publicly criticized
Garrett's decision, claiming that he did not have the authority to
grant even a conditional approval without first knowing the full
environmental impact of the mill. Other environmental groups
complained that the conditional approval will extend a costly period
of uncertainty in the Tasmanian economy. During an introductory
visit to Tasmania in early December by Consul General, both Premier
David Bartlett (Labor) and Leader of the Opposition Will Hodgman
(Liberal) touted the mill's economic benefits (reftels). Only
Tasmanian Greens leader Nick McKim opposed the mill, but noted that
he might change his position if Gunns agreed to refrain from
old-growth harvesting.

Comment
--------------


4. (SBU) Garrett's decision to grant Gunns additional time to
procure environmental approvals pushes final decision on the
controversial mill into the next federal and state elections. In
the 2004 federal elections, the Liberal Party won northern
Tasmania's two swing seats by championing jobs over the environment.
The Australian Labor Party won these two federal seats in 2007
after it backed the pulp mill. Garrett's January 5 announcement
means that the Gunns mill will likely figure largely again in the
2010 federal elections as well as in the state elections where the
mill has become shorthand for a broader environmental debate.


5. (SBU) Comment continued: The decision to delay approval of the
mill pending further evaluation illustrates not just the classic
employment vs. environment conflict (the mill is a huge investment
relative to the size of Tasmania's economy),but also highlights the
pressures on Environment Minister Garrett who is known as a former
die-hard environmentalist. With frustration over the Rudd
government's climate change white paper still lingering in recent
memory, the January 5 decision is further evidence that the Rudd
government is focused on the economy, even at the expense of further
alienating environmental groups.

GRANT