The viability of the Eden chipmill next year is not in question despite the impact of the global financial crisis, South East Fibre Exports general manager Peter Mitchell said.
“There is no doubt that the global economic crisis will impact in some way on nearly every business in Australia, but SEFE is probably better equipped than most to weather the financial storm,” he said.
Mr Mitchell was responding to a claim by Chipstop’s Harriett Swift that recent statements by SEFE might be softening up the industry for a major downturn or even closure of the chipmill.
She said that SEFE’s corporate affairs manager Vince Phillips had said that paper was a commodity very sensitive to economic fluctuations and the current downturn was hitting it hard.
“As dozens of chipmills and pulpmills are closing across North and South America and Europe, SEFE may be about to join this group,” Ms Swift said.
“His comments may also signal that the company is about to approach the Government for a large fix of taxpayers’ money to keep it afloat.”
Mr Mitchell said that SEFE was a mature business with no debt and a strong, loyal customer base.
“As Vince Phillips stated in a recent interview, 2009 will be a challenging year with a reduced level of activity predicted, but it must be pointed out that the company is coming off two record years in 2006 and 2007.
“SEFE’s viability next year is not in question,” Mr Mitchell said.
“Despite the current downturn, in 2009 SEFE is budgeting on having a top 10 sales year when you look back over its 40-year history of exports from Eden. “This enviable position is largely due to our recent diversification into softwood exports, and a continued commitment by our parent company Nippon Paper Industries.
“NPI continues to buy the majority of our output, sometimes at the expense of other suppliers not part of the NPI Group.”
Mr Mitchell said that from the sales budgeted for 2009, more than $77 million will be injected into the local, state and national economy.
“Further evidence of NPI’s shareholder confidence in SEFE’s future is the approval of our $18 million biomass power plant project.
“This adds to the more than $25 million of investment at our Eden facility in the last 10 years.
“In 2009, as for the last 40 years, SEFE expects to meet all of its contract provisions with the State Government and contractors supplying the mill,” Mr Mitchell said.
“Based on estimates of sawlogs to be cut in the Eden Forest Management Area in 2009, Forest NSW can expect to sell all the pulpwood generated from these operations to SEFE,” he said.
Ms Swift said that Mr Phillips had told ABC local radio last Friday that the chipmill would start 2009 “strongly for the first few weeks ... with no debt and no stock.”
SEFE would approach February and March “according to the circumstances at the time,” he said.
“That would be an excellent time for the chipmill to close,” Ms Swift said.
“April 1st is not just April Fools Day, it is also the start of the Japanese financial year and the day on which major corporate changes usually commence in that country.
“It must be a possibility that Nippon Paper will cut the chipmill loose in some way on that day,” Ms Swift said.
Mr Mitchell, in his response, also hit back at other anti-logging campaigners.
“Perhaps the most exciting prospect for 2009 may be the widespread acceptance of the South East as the ‘Wilderness Coast’ as preached by Green activist Pru Acton,” he said.
“This follows over 100 years of active forest management, and 40 years of woodchipping.
“What a miracle that all this has been achieved, despite the most knowledgeable forest managers all belonging to the conservation movement,” he said.
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