Log supply cut blow for Gunns

IT is understood Gunns Ltd has lost at least eight days' production at its Bell Bay sawmill because it has twice been refused a supply of logs.

While Gunns would not comment yesterday, it is understood production at the former Forest Enterprises Australia mill was lost when Timberlands refused to supply pine logs to the mill.

A Gunns spokesman refused to comment when asked whether the company's wood supply had been affected because its supply bills had not been paid.

The spokesman said that the company would not comment on commercial relationships.

Industry sources say that the company appears to be gathering finance in the month that it is supposed to have made a substantial start on the proposed $2.3 billion pulp mill at Bell Bay.

This includes delaying payment of accounts to a number of contractors and suppliers.

Gunns' managing director Greg L'Estrange said last month that the company was confident of making a start on the $30 million first stage of mill construction before its state permits expire at the end of August.

The permits require major construction works to be under way by then.

The Gunns spokesman said that he expected successful tenderers for the works to be announced this month with industry sources suggesting that the companies would be notified this week.

The signing expected this weekend of the intergovernmental agreement on forests should end speculation on the size of the payout to Gunns.

Mr L'Estrange has said for some time that he believed that the company should be fairly compensated for wood allocations after its decision to end native forest harvesting.

An "adequate" payment to Gunns as part of the forest agreement is understood to be a condition of sale of Gunns' Triabunna woodchip mill to Jan Cameron and Graeme Wood.

Gunns at one stage expected at least $200 million in compensation but industry sources said yesterday that it was more likely to be about $108 million.

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