Cargo cult hero or wet blanket?
I have asked this question many times before, but there has never been any kind of definitive answer.
Why will no one fund this pulp mill for Gunns?
Please do not include our pollies who have sprayed taxpayer dollars at this private paradigm with reckless abandon.
This is purely aimed at the trillions of investor dollars that roam the planet in search of an easy mark.
Gunns were once the darlings of the forest mining industry in Australia and with an omnipresent being in the island state of Tasmania, Gunns have gone from around $4.50 per share when they announced this pulp mill to the world, constantly working to a shackled trading halt at 16 cents.
Their plan was to build one of the world’s largest pulp mills on the banks of the Tamar River in northern Tasmania.
It was a cargo cult dream that would create 8,000-12,000 jobs, put money into the pockets of Tasmanians, power into the grid and billions into government coffers.
Well into year eight of this sorry tale and Gunns proudly announces a $20 million level site is finally ready and waiting for the pulp mill behemoth to appear like a rabbit from the hat.
The price quoted for such a chemical factory has varied, but is often quoted at $2.5 billion, so that is the figure I will use for the purpose of this exercise.
Lets take a peek at why this thing has failed to launch.
The numbers I use will vary as does the market, but the drift is plain enough.
Gunns pays FT for native forest, which cannot be much because FT runs at a massive loss.
Gunns pays contractors to cart them to the chippers. This must not be much either as contractors have been going broke left right and centre.
The logs are chipped and loaded onto boats and shipped to lands far away.
The price we have heard for these chips is $150 per tonne.
Gunns hasn’t done too well with their sales strategy for these chips and this has been reflected in their losses also.
I digress.
So they stand to make $600 for four tonnes of woodchips, less the aforementioned outgoings, yet there is no money to be made there as has been proven by the entire forest industry.
Four tonnes of woodchips will make one tonne of pulp.
Price for pulp is around $600 per tonne, so they stand to double their money.
So what are the outgoings set to impede the doubling of their money?
A few piddly items such as FT gestures and petrol money for cartage contractors?
Perhaps a small inconvenience called a Bleached Eucalyptus Kraft Pulp Mill.
A $2.5 billion outlay to double their dosh.
So if they can’t make a buck clearfelling forests, how do they think they will double their cabbage with a pulp mill?
I suggest to you, that this is the real and only reason that this Spruce Goose has gained so much praise from our leaders, yet failed to be anything more than a cargo cult hero for workers who dream of the easy life.
Prove me wrong.
