TASMANIAN Premier Lara Giddings sought out Asian investors for the beleaguered Gunns pulp mill project during her recent trip in the region.
Ms Giddings revealed her pitch on Wednesday as Chinese investors emerged to buy Gunns' assets and even the $2.3 billion pulp mill project, prompting a backlash from the Greens.
Ms Giddings said there were no firm proposals for the mill but that she had raised it as an investment option, along with Tasmania's dairy and mining industries, during her recent trip to China.
"My hope would be that we will see investment and I stand ready, my door is open, to work with any potential investor who wants to invest in Tasmania and in that pulp mill," Ms Giddings said in Hobart yesterday.
"I raised it in some various meetings [in Asia] in relation to and in the context of raising mining, in the context of raising dairy. I also raised the fact that we have a pulp mill project in Tasmania which is also looking for investment."
Gunns was placed into administration on Tuesday after its lenders pulled their support, deciding to not allow the company to retain funds from asset sales to keep operating.
Sources close to the industry said Chinese investors were the most likely buyers of not only the timber assets but also any resurrected pulp mill project.
The failed timber company's receiver, KordaMentha, said the pulp mill project might be resurrected under a fresh capital structure.
Chinese investors have sought agricultural assets in Tasmania before and China's sovereign wealth fund is poised to invest in Australia's largest dairy farm, at Woolnorth, in the north-west of the state.
Forestry operations and increasingly manufacturing is expensive in China, which will need pulp well into the future. Given Tasmania's proximity to Asia, Chinese interest in Gunns' timber estate, sawmills and the pulp mill is likely to be high.
KordaMentha's Mark Korda told The Australian Financial Review the receivers would review the pulp mill project next month with a view to recapitalising it, entering a joint venture or selling the permits to investors.
"The pulp mill is a big project, worth several billion, but if someone wanted to invest in the pulp mill project directly they could – this is separate to Gunns' legacy issues." Mr Korda added that the goal was to restructure Gunns' forestry estate, and try to reunite the land and trees. Under managed investment schemes, growers own the trees, but not the land.
"The land and trees are likely to be restructured," he said. "In Timbercorp the banks and growers agreed to sell everything while in Great Southern the MIS schemes were restructured."
The Greens, in minority government in Tasmania and federally, are against the mill, claiming this week that the project was dead.
Greens federal senator for Tasmania Peter Whish-Wilson said there would be no opposition to a foreign buyer, Chinese or otherwise, if it was looking to leverage Gunns' assets into local investment and employment, but not if the aim was to resuscitate the pulp mill project.
KordaMentha is expected to try to keep the business running as long as possible, and sell the pulp mill permits.
The timber estate could underpin the pulp mill, which was Gunns' plan originally.
Gunns already had accountancy firm Grant Thornton Australia working on an independent expert's report for managed investment scheme growers.
The sawmills at Bell Bay and Tarpeena may be still be sold to Chinese investors.
"I think there would be a collective heart attack if someone was to pop up and say we will build a pulp mill," Senator Whish-Wilson told the Financial Review.
Tony Rundle, Tasmanian Liberal Premier from 1996 to 1998, said Chinese interest was most likely in the assets.
"Tasmania is desperate for any investment at the moment and any Chinese investment would be significantly welcomed," he said.
"We have seen the success of the Chinese-led bid for Cubbie Station and there is some Australian interest in that – Tasmania is a desperate situation at the moment and people there would welcome investment, without being sensitive about it."
He predicted more Chinese interest in Tasmanian assets, but accused the state minority government of deterring funds.
KordaMentha will pick up asset sales processes that were already in train before the company collapsed.
It is understood Gunns has offloaded the second tranche of units in the Green Triangle plantation venture with timber manager New Forests in Victoria and South Australia, and was expecting to receive about $25 million in proceeds.