Western Junction Sawmill director Vince Hurley said other sawmill owners in the state are targeting his company with a lobbying and media campaign aimed at locking him out of the bidding process for logs sold by state-owned Sustainable Timber Tasmania.

He said recent attempts to portray his company as a non-Tasmanian entity that was using Victorian government resources to outbid local Tassie family-owned sawmills were "false, misleading, and exaggerated".

"They are designed to create a negative perception and public outrage against the company and encourage political intervention in the upcoming Expressions of Interest process announced by Sustainable Timber Tasmania," Mr Hurley said.

He said existing sawmills wanted to keep log prices low, at the expense of Tasmanian taxpayers and private plantation owners.

Earlier this month, Tasmanian timber industry veteran, Terry Edwards, claimed that an influx of Victorian buyers into Tasmania following the shutdown of logging in that state could damage the Tasmanian timber processing industry.

Mr Edwards, who was chief executive officer of the Forest Industries Association of Tasmania for 16 years, went public with the warning after a Tasmanian timber company, T.P Bennett and Sons lost out on a contract with STT in favour of a Victorian company.

A government spokesperson has confirmed it temporarily froze bidding as a result of the backlash over T.P Bennett and Sons, while resources minister Felix Ellis said he had ordered a review of the tender processes used by STT to select buyers, including its Buy Local Policy.

Mr Edwards said cashed up mainland buyers were the biggest threat the Tasmanian industry had ever faced.

He disputed Mr Hurley's claim that Western Junction was a Tasmanian company that had not benefited from Victorian government resources or payments.

He said the sawmill, located south of Launceston Airport, was bought by interstate shareholders including Mr Hurley in 2021.

He claimed it received indirect funding from the Victorian government through its shareholders, which are connected to Victorian timber company Australian Sustainable Hardwoods (ASH) and the Heyfield sawmill, one of the nation's biggest.

Heyfield is majority controlled by the Victorian government, following a government buyout in 2017.

Mr Edwards said an investigation of the finances and ownership of these Victorian companies and the Western Junction sawmill suggested that the shareholders bought the Tassie sawmill company with $11.2 million lent by ASH.

This Victorian connection allowed Western Junction to outbid local rivals, Mr Edwards said.

"He is paying more than other mills in the state ... but when you've got Victorian Treasury bankrolling you, you can afford to do that," he said.

"When you don't have to find any equity funding of your own, everyone else has to go out to their banks and borrow money," he said.

He said one of the sawmills he was representing in the campaign had recently spent over $10 million investing into a new facility at Bridgewater.

"No government funding, no help from the state of Tasmania or the state of Victoria or anyone else," he said.

"And these people have to compete with Hurley, who's getting his money gratis ex the Victorian taxpayer."

"He got $4 million last year as compensation ... they paid him because they didn't send him his logs."

But Mr Hurley said suggestions that the Western Junction Sawmill company was affiliated with the Victorian government or not Tasmanian were wrong.

"Western Junction is an independent private company, it is owned by five independent shareholders, me being one of them," he said.

But Western Junction's shareholders also own ASH, he confirmed.

"Western Junction sells products to ASH at a commercial price, at a market price. It operates as a separate entity, it's registered in Tasmania, it only employs Tasmanians, it only has Tasmanian contracts, it has a Tasmanian bank account, it has a Tasmanian postal address, it is Tasmanian."

Western Junction employs 30 Tasmanians and is planning to invest over the next decade to boost on-island processing, Mr Hurley said.

He said STT should alter its tender process by requiring participants to "not have any government or non-government organisation ownership or affiliation".

He also accused some of the sawmills represented by Mr Edwards of hypocrisy, since some of them were owned by Victorians and were similarly selling logs interstate.

Mr Hurley confirmed he does export logs to Victoria, but stressed these were private plantation logs that used to be sent to China or were being used to make woodchips.

He also said sending logs to Victoria for processing in the Heyfield sawmill was an "absolute temporary measure".

He said his company plans to invest $37 million over ten years in order to eliminate the need to send Tasmanian logs to Victoria.

"Once we have completed our plans, those logs will be used on-island for high-value manufacturing," Mr Hurley said.

As a result of the investment, the Tasmanian workforce would double to 60, and the company would produce "high-value manufacturing" products including window, door and stair components, benchtops, as well as large beams and columns.

He said other timber yards in the state had failed to invest in order to make what he claimed were these high-value products.

"The wealthy sawmill owners have had many years to invest in high value manufacturing in Tasmania and provide Tasmanians the best return but have failed to do so in any significant way," he said.

"They have reverted to their previously successful method of political influence and [a] media campaign using their former seasoned lobbyist."

Mr Hurley said that he presently had no plans to participate in STT tenders.

He accused Mr Edwards' sawmill clients of attempting to force down the price of timber in the state, and claimed that many private timber plantation owners were glad to see increased competition in the market.

Mr Edwards said STT was using the presence of Victorian buyers such as Mr Hurley to set a price floor for timber.

The brewing fight between the sawmills comes ahead of an expected change in STT's production plans and agreements.

Under existing arrangements, the state timber company supplies at least 137,000 cubic metres of native forest logs per annum to contracted buyers.

However, with native forest supplies dwindling, this might fall significantly in coming years, to 58,000 cubic metres after 2027, according to some estimates.

STT is planning to make up the difference via the use of plantation timbers.

But the state company is planning to auction these off to the highest bidder, leaving Tassie sawmills exposed to cashed-up Victorian players, according to Mr Edwards.

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