A paper mill is suing the Victorian government for more than $400 million in damages, accusing it of not providing a steady supply of pulpwood.
Paper Australia, trading as Opal, has filed proceedings in the Supreme Court of Victoria, claiming the government breached a contract that required it to provide a stable supply of pulpwood to the Maryvale Mill in Gippsland’s Latrobe Valley.
The Maryvale Mill ceased white paper production in 2023, but still produces other paper products in a smaller capacity, in the wake of dwindling native timber supply and the state government ending native timber harvesting in 2024.
Opal operates the mill near Morwell, and is a major employer in the region, with more than 500 people at its site and a direct economic output of more than $622 million each year.
The company said it was suing the state government for substantial loss and damage.
The Maryvale Mill, near Morwell, stopped making white paper in 2023. (Supplied)
Negotiations broken down
The wood pulp agreement was initially signed in 1996 between the state government and Amcor, the original operator of the mill, before the rights were assigned to Paper Australia two years later.
Under the agreement, the state government would supply Opal with pulpwood for paper and in particular, native harvest eucalypt wood, which was identified as a “critical raw material” for the company’s white paper products.
But in late 2022, the government advised Opal it would not be able to fulfil its obligations, against a backdrop of court cases that had halted native timber harvest production.
Workers at Maryvale with the mill’s last ream of Reflex white paper in January 2023. (Supplied)
According to documents filed by Opal,the government provided a reduced supply of wood in 2022-23, resulting in Opal terminating its agreement with the government in May 2023.
The company went on to shut down white pulp and paper production in early 2023, with more than 400 jobs lost nationwide.
Opal claims the company sought to reach an outcome with the government, but decided to pursue the matter in court after nearly three years of discussion.
The Maryvale mill is located near Morwell and Traralgon in the Latrobe Valley. (ABC Gippsland: Kerrin Thomas)
In a statement, Opal said the closure, coupled with a reduction in production volumes and redundancies, had caused it “substantial loss and damage”.
“Opal has sought to reach a negotiated outcome with the Victorian government,” the statement said.
“However, after almost three years of discussions without resolution, Opal has been left with no choice but to proceed with a court-determined outcome for the damages owed to it.”
Denise Campbell-Burns says the end of the state’s native timber industry has gutted country towns. (Supplied: Denise Campbell-Burns)
‘Ghost towns’
Timber Furnishing and Textiles Union president Denise Campbell-Burns said while the union could not comment on the court proceedings, the situation between the state government and Opal was “a debacle” for hundreds of redundant Maryvale workers.
“No amount of compensation that Opal gets from the government will reverse that situation,” she said.
Ms Campbell-Burns said the closure of the native timber industry was a travesty, with widespread ramifications for Gippsland.
“You drive through the Gippsland area and you look at what were flourishing timber towns that look like ghost towns,” she said.
“People move away, young people move away because there’s no jobs.
“They leave their elderly families, they leave young people … and the towns become a shadow of what they were.”
Melina Bath says the closure of Victoria’s timber industry has created “significant harm”. (Supplied: Melina Bath)
Nationals Member for Eastern Victoria Region and Shadow Minister for Public Lands Melina Bath said Opal was a huge employer in the Latrobe Valley.
She said the government closing the timber industry seven years early had created “significant harm” to the local community.
“It cut off a supply chain for Opal which resulted in … loss of jobs and loss of production,” she said.
“This legal action confirms the very serious economic damage, not just to Australian paper, but to the broader Gippsland community.”
Ms Bath said the paper industry was a respected and trusted source of employment and it needed to continue.
“It needs to grow and be strong,” she said.
A Victorian government spokesperson said it would be inappropriate to comment as the matter was before the courts.