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Harris Daishowa's financial problems are having a big impact in Australia

RICHARD ACKLAND: One of the world's largest paper and pulp makers, Japan's Daishowa company is in financial trouble. The company has a massive accumulated debt of 450 billion yen - that's almost half a billion Australian dollars - and to try and get its house in order, the company has been forced to sell a brand new billion dollar pulp mill in Canada, and slash its work force by 40 per cent. Analysts claim that the company is the enfant terrible of the paper industry; its reckless expansion plans have led to overcapacity in the industry worldwide, resulting in record paper stockpiles and plunging profits. In recent years, some of the fiercest environmental debates in this country have been over pulp mills and wood chips - both essential elements in the paper-making chain. As Daybreak's Gordon Taylor reports, the troubles at Daishowa are having a big impact in Australia.

GORDON TAYLOR: The Daishowa Paper Manufacturing Company is Japan's second biggest paper and cardboard manufacturer, in an industry that in size is second only to the United States. In Australia, it's best known for its subsidiary, Harris Daishowa, which for over 20 years has been exporting wood chips from the forests of south-east New South Wales, around Eden. But worldwide, the paper industry has been hit by a recession, resulting in over capacity, falling prices, record stockpiles, and plunging profits for Japan's paper makers. And Daishowa is worst off of all. It recorded a massive pre-tax loss of 14.9 billion yen in the fiscal year through March 1991. Japan's Niki(?) weekly newspaper reports the debt-burden company now plans to sell an only recently completed billion dollar pulp plant in Canada, shut some of its facilities in Japan, and slash its work force by 40 per cent - all in an effort to contain its accumulated 450 billion yen debt.

Pulp mills are a form of downstream processing of our forests' resource. There is greater value to Australia in exporting pulp than there is in exporting raw woodchips. The man responsible for giving Harris Daishowa the go-ahead back in 1967 for its controversial New South Wales woodchipping activities, was Jack Beale, a Minister in the Askin Liberal Government. He insists that in 1967, Daishowa undertook to build a pulp mill within seven years. Because of its debt problems, Daishowa plans to sell a hardwood pulp mill at Peace River, in Canada. Only completed last year, it has a price tag of one billion Canadian dollars. It means that 24 years after beginning operations at Eden, there is no likelihood of a pulp mill being built. And Daishowa's problems affect other States as well. Daishowa has expressed interest in building a pulp mill in Tasmania. Tasmanian Premier, Michael Field, still hopes to get a new mill built in his State. Two years ago, the Wesley Vale pulp mill proposal of North Broken Hill and Canadian partner, Noranda, foundered because they couldn't meet strict environmental guidelines. Now Premier Field has given North Broken Hill a two-year window in which to decide whether they'll build a new pulp mill. But the parlous state of the world pulp and paper market means a new mill makes no economic sense; besides, Daishowa is trying to sell a brand new billion dollar mill in Canada. Tasmanian Green Independent, Dr Bob Brown, says any pulp mill proposal for Tasmania is now doomed.

BOB BROWN: Well, it shows that the state of the pulp market is absolutely awful. The exact words that were used by Adam Zimmerman, who's the head of Noranda Corporation in Canada, who on the weekend made it clear that there wasn't going to be a pulp mill in the near future in northern Tasmania, simply because of this world market situation; in fact, it's years away. There is no prospect for an immediate start to a pulp mil, and North Broken Hill itself is not going to make a decision for at least 18 months to two years about a pulp mill in Tasmania. But you know the governments are being caught out. The Labor Government in Tasmania and Mr Hawke's Government in Canberra have pushed ahead with their resource security legislation which is all about locking up large areas of forests, so that massive investment, for example, before the pulp mill in Tasmania could go ahead, because the companies wanted resource security. Well, they're getting the resource security but the governments aren't getting the pulp mill.

GORDON TAYLOR: But Mr Field, obviously .. the Premier of Tasmania obviously feels that a pulp mill is still possible. He's still going down that path, isn't he?

BOB BROWN: He's in a hole. Yes, he is going down that path, but clearly as Adam Zimmerman who's a world authority on this and certainly was prepared to invest in a pulp mill in north-west Tasmania just three years ago, has made it clear there is no prospect of a pulp mill in north-west Tasmania. Resource security was based on that being the winner, but the horse has been scratched from the race.

GORDON TAYLOR: So, by resource security you mean the wood supply from forests in Tasmania, what - to supply the mill?

BOB BROWN: That's right. Basically resource security was a means of .. by governments guaranteeing that there be no future national parks or no future large areas protected in the currently unprotected forests, so that the company could rest assured if it built a pulp mill, it could keep chewing into these forests, regardless of their quality because the governments had to underwrite the volume of timber that was going to come out of the native forests and be processed through the pulp mills and exported as pulp.

GORDON TAYLOR: So what happens then with the wood, if the pulp mill isn't built?

BOB BROWN: Well, part of resource security is to allow the export woodchip limits to go up, so that the Field Government in Tasmania broke its accord with its green partners which restricted pulp exports, woodchip exports, to just under three million tonnes. They're allowing that to float anything up to five million tonnes; it will allow companies like North Broken Hill in the years ahead to increase their export woodchipping and yet not to have guaranteed that they would proceed with a pulp mill. They can't lose. North Broken Hill is on a winner, but the governments are selling out as far as protection of Australia's forests are concerned, both at State and Federal level.