NEW pulp mills need to be bigger with cheaper labour, energy and fibre costs, according to retired pulp and paper consultancy company director Robert Eastment.
But at the same time pulp prices are the only ones in the pulp and paper industry that have risen in the past seven years, Mr Eastment said this week.
He was commenting on news last week that Gunns receiver-manager KordaMentha plans to have both failed timber company Gunns' proposed Bell Bay pulp mill and its permits on the market before Christmas.
A KordaMentha spokesman said that it made sense for the receiver to have the proposed mill project up for sale at the same time that Gunns' liquidator PPB Advisory tried to sell off the company's investment plantation forests, mostly planted to feed the mill.
Mr Eastment told a national conference in Melbourne last month that woodchip growers and paper makers were being challenged by pulp prices internationally.
But pulp prices were volatile and although pulp was mostly traded in US dollars, the exchange rate meant that both Australian sellers and buyers were impacted, Mr Eastment said.
The trends regarding pulp and paper mills worked against plans that developers might have for a new mill in Tasmania, according to Mr Eastment.
``Integrated mills in the `west' are being replaced by market-based mills in the `east','' he said.
Industry figures showed that while pulp prices have risen 40 per cent in the past seven years, paper prices were stagnant, Mr Eastment said.
Paper manufacturers faced rising energy and labour costs, margins were under huge pressure and there was a lack of investment in existing paper mills, he said.
At the same time Australia had sufficient plantation fibre to supply at least three world-scale pulp mills, he said.
Mr Eastment said that Australia generally had adequate fibre supplies to build a pulp mill.
Tasmania's power supplies were sufficient.
The necessary, skilled and experienced labour was available.
Prospective Asian markets would provide the best option for any Australian processors.
It is understood that the size and design of the proposed Bell Bay mill is still adequate to meet modern demand but would need strong political will to make it happen.