By Andrew Darby
GUNNS is pinning hopes for its $2.2 billion pulp mill in the Tamar Valley in Tasmania on an improving global pulp outlook, as a potential investment decision appears to inch closer.
Years into its search for an investment partner in a project first announced in 2004, Gunns added little to earlier advice in its full-year results statement yesterday.
''Three interested parties have progressed from the initial bid process and are undertaking detailed due diligence in relation to the investment,'' the company said.
But it believes demand in the Asia-Pacific region for pulp will soon outstrip supply, leaving the mill in a strong competitive position.
The chief executive, Greg L'Estrange, said the difficult market for export woodchips had reinforced the merits of a sustainable, plantation-fed mill.
''In a period where wood fibre value has remained static in real terms, pulp value has increased significantly with a strong outlook,'' Mr L'Estrange said.
The project is being held in ''ready'' status to allow construction to start as soon as an investment deal is tied up.
Gunns has also outlined plans to build a ''social licence'' for the mill, a key requirement if the pulp product is to gain Forest Stewardship Council certification.
A client adviser at Shadforth Financial Group, Andrew Inglis, said Gunns' main revenue source, woodchip sales, appeared to be stabilising after declining 30 per cent to 2.2 million tonnes in the past year.
Gunns unveiled plans to begin woodchip sales from Albany in Western Australia in the first quarter of 2011 and a new plant at Portland, Victoria, in the second quarter.
The company confirmed a net profit already reported of $28.5 million, down 50 per cent on the previous year.