Work to start on $2bn pulp plant
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ALL SET: Plantation Timbers Group general manager Dr John Kellas at a blue gum tree plantation at Mt Gambier yesterday. Picture: CALUM ROBERTSON
A REVITALISED $2 billion Penola pulp mill project will be one of the biggest infrastructure investments in South Australian history, creating 260 jobs and adding more than $500 million to the economy a year.
The project is back on track under the guidance of high-profile Adelaide businessman Greg Boulton and construction could start as early as the middle of next year.
Mr Boulton - the former president of the Port Adelaide Football Club - has been appointed chair- man of the company behind the project, which would employ 260 people full-time and up to 1600 during construction.
$2b mill will revitalise THE Commonwealth Bank has come on board to help raise capital to build the mill and former Amcor Australasia chief operating officer Don Matthews has joined Penola Pulp Mill Pty Ltd as chief executive.
It is good news for the forestry industry in the state's South-East, which has been rocked by the failure of large forestry companies Timbercorp and Great Southern Plantations in 2009, and the loss of 130 jobs at Carter Holt Harvey's Nangwarry mill in February.
The project has been criticised for its potential impact on the water table, however, as well as the possible impact on the endangered red-bellied, black cockatoo, and is sure to attract stiff opposition from environmental groups.
Limestone Coast Regional Development Board chief executive Grant King said it was a "very significant potential investment" for the area.
"It's a critical investment for the region. In terms of the forest industry it's a very important investment and it would be largely welcomed by this community," he said.
"This will underpin a number of new jobs and growth in another part of our forest estate, which is all plantation-based."
The pulp mill, which was previously estimated to cost $1.5 billion, was effectively shelved during the global financial crisis, when ANZ pulled out of a financing deal.
But the Commonwealth has recently come on board and is helping Mr Boulton and Mr Matthews raise $20 million to finalise the design and lock down contracts for the project.
The company hoped to raise this money by September, and would look to raise the $2 billion capital cost of the project by March-June next year.
Mr Boulton said the company hoped to start building the mill, about 7km outside of Penola, almost as soon as the money had been raised.
"It's around about 260 full-time equivalent jobs directly created, and of course the real benefit is the flow on to the community for all of the suppliers, so usually people use a two or three times multiplier effect," he said.
Mr Boulton has a long history of association with the South-East through his role as a director of Mt Gambier-based logistics firm K&S Corporation, which is part of the group of companies built by former transport magnate Allan Scott.
"It will also be very good for the state. The first couple of years of operation our revenue is in the $600 million a year (range)," Mr Boulton said. "It's substantial for the area and South Australia, and I might, dare say, Australia."
Mr Boulton said there was an ample supply of plantation-grown hardwood in the South-East of SA and the south-west of Victoria to meet the mill's needs of 1.5 million tonnes per year.
He said the company was negotiating with the administrators of Timbercorp and Great Southern Plantations for wood supplies and was hoping to have agreements finalised within two months.
"We'll probably take about half of the South-East's timber from 2012 onwards."
Environmental groups have criticised the State Government in the past for passing an indenture Act covering the planning consents for the project that does not require the company to produce a full environmental impact statement.
The Act also guaranteed the mill a water allocation, Mr Boulton said.
The mill has federal environmental approvals and has been assessed by the state Environment Protection Authority.
Possible emissions and the effect on the water table have been at the forefront of concerns raised by local farmers and environmental groups.
State Environment Minister Paul Caica said the Act, which covered the mill would deliver sustainable environmental, social and economic outcomes.
"The environmental concerns of the community were taken into consideration by a parliamentary select committee set up specifically to look at the proposal," he said.
"In its final report, the committee concluded there are sufficient planning and environmental checks and balances in the Penola Pulp Mill Authorisation Act 2007, for a proposal of this nature.