Australia’s last white paper mill sues Victoria for $402 million over lost jobs, closure

2 hours ago 2

A Japanese paper company is suing the Victorian government for $402 million, alleging they broke an agreement to provide a steady supply of native timber to their white paper mill in the Latrobe Valley.

Opal, part of the Nippon Paper Group, on Monday revealed it had lodged Supreme Court action against the state and were asking for significant compensation.

Opal Australian Paper’s Maryvale paper mill in the Latrobe Valley.

The company operates the Maryvale Mill in the Latrobe Valley, one of the biggest sources of employment in the region, which in 2023 shut down its white paper operations, the last of its kind in Australia.

An agreement was signed with the mill’s previous owners, Amcor, in 1996 – and subsequently transferred to Opal – in which the Victorian government would supply Maryvale with pulpwood until 2030.

VicForests, the now defunct state-owned logging agency, provided eucalypt wood, a type of native timber used for white paper, as part of this agreement but in November 2022 told Opal it would be unable to meet its obligations and had to reduce its supply.

This was largely driven by a court decision that month which found VicForests had failed to protect endangered species and ordered it to suspend operations.

As the saga dragged on, white paper operations at Maryvale were shut down in February 2023 after the government told Opal it would not supply any further timber, which led to the agreement with the state being terminated in May of that year.

This coincided with the Andrews government’s decision to bring forward its ban on native timber harvesting, accelerating it from 2030 to December 31, 2023.

At the time, then-Treasurer Tim Pallas said the decision was influenced by legal advice that the state would be unable to legislate its way out of future court disputes.

In a statement, Opal said there were no viable alternatives to replacement the discontinued supply, which led to the loss of more than 400 jobs and “substantial loss and damage” to the business.

Opal said they had sought to negotiate compensation with the government but had failed to reach an agreement, leading them to take the matter to court where they will seek $402 million in damages.

“Opal hopes that, with the case now before the Supreme Court of Victoria, the matter will be determined fairly and in a timely manner, providing resolution not only for Opal and the Victorian government, but also for the Maryvale Mill, the Latrobe Valley, and the wider Victorian community,” they said.

The Allan government has been contacted for comment.

When it brought forward the closure of the native timber industry, the state announced a $200 million additional support package. They also committed to accelerating the transition to plantation timber.

Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.