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New road forward for timber industry -

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KERRY O'BRIEN, PRESENTER: Significant changes underway in Australia's timber industry, with a big
effort in Tasmania in particular to break down traditional hostilities that have dogged the
landscape for decades. The chairman of the Australia's biggest publicly listed timber company,
Gunns, John Gay, resigned recently after sustained pressure from institutional investors. He was
the driving forcing behind the contentious pulp mill proposal in northern Tasmania. His departure
is viewed by many as one signpost on the road to sustainability for the industry and now a new
player has emerged in a bid to get green groups and the timber industry working together. Martin
Cuddihy reports from Hobart.

ADRIAN BENNETT, LOGGING CONTRACTOR: I'm fourth generation in the industry. Followed in me father's
footsteps. It's in the blood sort of thing. You know, it's what I've done since I left school.

MARTIN CUDDIHY, REPORTER: Logging contractor Adrian Bennett says there's nothing he'd rather do.
Everything he harvests here goes to the timber giant Gunns. Most of it will be turned into saw
logs, flooring and timber veneer. About 15 per cent will become woodchips. But times have turned
tough.

ADRIAN BENNETT: We've had to tighten our belts here to keep our men employed. The men are pretty
loyal us to, we look after 'em and that there, we've got a good crew.

GERARD BENNETT, CABLE LOGGER: I've got a family, I've got a mortgage. It's - you know, my house is
on the line, and nearly every guy on the job's the same.

MARTIN CUDDIHY: It's no secret there's rot in Australia's timber industry. This year, the
international woodchip market has expanded by more than four per cent, but local experts have
fallen by 25 per cent.

The decades-old conflict between loggers and green groups who've been blamed for much of the
downturn.

Feelings run high between the two and sometimes boil over into violence.

DAVID BARTLETT, TASMANIAN PREMIER: In Tasmania, there has been, I guess, a - almost a civil war
going on over our forests.

ROBERT EASTMAN, INDUSTRY ANALYST: There's no doubt that the forest industry, both in Tasmania and
across Australia, is on a watershed.

MARTIN CUDDIHY: Paper and forestry analyst Robert Eastman believes the industry can turn around
provided it capitalises on groundswell of corporate and public sentiment.

ROBERT EASTMAN: Some changes are happening. They're not very significant to date. But I think with
some new management and some change in attitudes. I for one would also like to see far greater
consultation with community and stakeholders.

MARTIN CUDDIHY: The recent resignation of Gunns' chairman John Gay, reportedly because of pressure
from institutional investors, may prove to be a watershed moment. He ran Australia's largest
forestry company for 28 years. Mr Gay was seen as an environmental vandal by green groups and had a
reputation for ruthlessly pursuing the company's business interests.

So was Mr Gay difficult to do business with then?

GREG L'ESTRANGE, CEO, GUNNS: I think John is a - he's a very, ah, ah - can we just stop there for a
second?

MARTIN CUDDIHY: I can ask the question again if you like. Was Mr Gay difficult to do business with?

GREG L'ESTRANGE: I don't think John was difficult to do business with. He had a view of where the
business needed to go.

DAVID BARTLETT: John leaving the job might enable institutional investors and others to change
Gunns, to modernise it, I suppose.

MARTIN CUDDIHY: The market reacted strongly to news of his exit, the share price rose 40 per cent
in a day. Chief executive Greg L'Strange says the firm has softened its hardline stance.

GREG L'ESTRANGE: I think the company is moving into - more away from a conflict as a means of
resolving issues to how do we actually sit down and work for resolution?

MARTIN CUDDIHY: The company's number one priority remains building a pulp mill in northern
Tasmania. The $2.5 billion project was John Gay's ambition vision. Since his departure, there's
been renewed interest in Gunns from China, South America and Europe. The German investment Deutsche
Bank now owns more than five per cent of the company.

GREG L'ESTRANGE: We're heartened by the interest, and - but, again, we have to continue through
that process and when we are in a position to make sort form of announcement, we will do that.

MARTIN CUDDIHY: Gunns says the mill won't use any woodchips from native forests. Regardless,
environment groups remain fiercely opposed. They say it will pollute both Bass Strait and the air
in the Tamar Valley. Finding any agreement between Gunns and the green groups won't be easy.

Still, Tasmania's Premier, David Bartlett, is going to try.

DAVID BARTLETT: I'm not interested in another piecemeal approach that simply locks up some more
trees but doesn't end the challenges we have in our markets, doesn't provide us with more
downstream opportunities, value adding opportunities. We need to have the conversations that will
see if we can get to that point and provide real resolution.

PHIL PULLINGER, ENVIRONMENT TASMANIA: Now is the time and the opportunity to create a solution to
this issue that both protects our native forests and protects a future for our timber industry.

MARTIN CUDDIHY: Dr Phil Pullinger is the director of Environment Tasmania and part of a new
alliance called Our Common Ground. It's an unprecedented move, but some in the timber industry and
green groups are now working together. The group wants the industry to exist on plantation timber
only.

PHIL PULLINGER: Common Ground is a coalition of environment groups, business leaders, community
leaders, timber workers and people from a broad array of backgrounds all working towards solving
this issue.

DAVID BARTLETT: I am optimistic that the forest industry in Tasmania does have a bright future, but
there's a lot of work to be done to get it to that bright future.

MARTIN CUDDIHY: In the southern forests, Adrian Bennett reckons he doesn't have much of a say in
what happens next, but the mill would provide his business with certainty.

ADRIAN BENNETT: The pulp mill, we'd like to see that go. That'd get the industry back on its feet
sorta thing.

GREG L'ESTRANGE: We have to have a framework that both industry and the environmental groups can
see as a path forward to create a future.

KERRY O'BRIEN: Martin Cuddihy with that report.