Economy
Gunns’ 5 year share price decline
That red line on the graph shows the last five years of Gunns trading history on the Australian Stock Exchange. Concentrate on the red line. You’ll see how since the inception of the pulp mill idea five years ago, the company has been trending downwards in its share price. Things changed for a while in 2007, can you seen that first pointy bit in April 2007? Yeh, that’s when the Pulp Mill Assessment Act was forced through. But the change was short lived, the slide resumed…
Check out August 2007 – the company has again been on the slide, slipping back to near where it was before that so-called Pulp Mill Assessment Act. Yet then it picks up, rising sharply through September. What has caused this? Oh dear, good old Ivan Dean and the others, Tanya Rattray-Wagner etc have passed the pulp mill permit at the end of August 2007. On the strength of it, Gunns shares rose steadily for a month, then plateaued before resuming their long term decline.
Dear me! Poor John Gay announced publicly that his then $1.9b mill wouldn’t be able to go ahead if Turnbull imposed any new federal restrictions or changes. [Well, why not? The bleating sheep approach had worked for Lennon, ipso facto, it’d work for Turnbull.] It was tough stuff. Gay had been remunerated $1.4m over the year and consoled himself by constructing a big new mansion on the hill above Launceston.
Well it did work for Turnbull… he approved the Commonwealth component of the mill proposal, imposing 24 conditions on the proposal. Off the top of my head, I recall one of those conditions well. There is a family of Wedge-tailed eagles lives in a gully adjacent to that part of the mill site from which it has been proposed to blast 100,000 cubic metres of dolerite in the first year of construction of the mill. If the birds desert the nest site in the 1st 6 months of construction, guess what? Will construction stop? Of course not. Gunns will just have to find an unprotected nest somewhere else in Tasmania and protect that! If the birds hang on for the 1st 6 months, then Gunns are absolved of all responsibility towards them. It’s all there in the fine print.
So where were we? Oh yes … Turnbull approves the mill with ‘tough’ conditions. Back on the graph you can see Gunns share price having shot up steeply, reaches another plateau and hovers. The campaign moves into another phase. It becomes the fight against finance and action in the Federal Court. It is our October of discontent and again Gunns shares begin that downward slide. Launceston said goodbye to its pro-mill mayor, Ivan Dean at the end of that month.
Seems like the world economic crisis came along, so did a new Federal government. Garrett was no help. Gunns along with the AJO (top 200 companies – that’s the blue line) fell down, down, down. But look, when at the beginning of 2009 the blue AJO starts climbing out of the pit, Gunns tries to follow, does so weakly for a month or two, and then remains well below. The company is now at 87c.
Have a final look at the graph. That red line graph show how Gunns share price has got lower and lower ever since John Gay and Paul Lennon first promoted this stinking rotten pulp mill. Before the mill proposal, Gunns had been rising year by year. The mill proposal is killing Gunns in the share market.
Requiescat in pieces.