TA Ann Tasmania has reassured its 110 workers that their jobs are safe - for now.
The Malaysian-based company announced its decision yesterday after threatening to close its Southwood and Huon mills if a forest peace deal wasn't ratified by State Parliament.
Instead, all employees will be stood down with pay for seven weeks, rather than the typical three weeks.
The company has also put its plans for a $10 million plywood mill in the North on hold.
Ta Ann Tasmania executive director Evan Rolley said it would stay operating because:
State-owned business Forestry Tasmania had agreed not to pursue payment it was entitled to if Ta Ann didn't accept contracted wood supplies.
The Commonwealth would start negotiating payments with Ta Ann in exchange for reduced wood supply contracts.
The state government had taken steps to reduce its power bills.
Environment groups had committed to support Ta Ann in an overseas market campaign to start next month.
``What's happened in the last 72 hours is, frankly, a really remarkable effort. None of those elements were there a week ago, and some of those elements only came together (yesterday) morning,'' Mr Rolley said.
He will write to all MLCs to outline the company's position and urge them to carry out their inquiry into the deal as quickly as possible so a vote is taken on the Tasmanian Forests Agreement bill.
Mr Rolley said delaying that vote by months had cost the company another customer in Japan and hundreds of thousands of dollars.
At the same time, federal Environment Minister Tony Burke said that he would progress every aspect of the peace deal he could while the Legislative Council deliberated.
``I'm telling staff to run those programs, contract those programs but have all payment conditional on the final protection orders being brought in with the full force of law,'' Mr Burke said.
He denied that he had been bluffing with earlier warnings that that money would be taken from the table if legislation didn't pass by the end of the year.