GNS (Gunns) has taken off like a rocket over the past few days.
I am aware that this company is controversial due to woodchipping - I'll leave judgements there to individuals to decide. It also has interests in vineyards and hardware retailing and a proposed pulp mill in Tasmania.
One stage of the public consultation period for the pulp mill has now ended and presumably explains the share price rise.
As part of the pulp mill proposal, GNS has announced a 550% increase in the area of land required. Officially this is for a buffer zone etc. around the mill. My personal thoughts in view of this and the location chosen for the mill is that the extra land is probably to enable the construction of a paper machine on site at a later stage. Whilst increasing the overall impact, paper production would tend to enhance the political and (for many) public appeal of the project.
A brief summary of the objections being raised to the proposed mill and my comments (mine not GNS') on them is as follows (this is all non-financial comment so stop reading if you just want to check out the share price. As I said, it's going up):
1. Dioxin emissions. The mill will produce small amounts of dioxin as a waste product. This will be discharged into Bass Strait via an ocean pipeline. Waste will NOT be dumped in the Tamar River as opponents assert.
Comment: Dioxin from pulp mills has been almost totally eliminated in recent years. The emission levels would be a very small fraction of those of the pulp mill which operated at Burnie (Tas) from 1938-1998. The Wesley Vale mill also used a chlorine bleaching process (the source of dioxins) until recently and did not appear to cause problems.
The major source of human exposure to dioxin in the Tamar Valley is thought to be domestic woodheater emissions. Air quality in the region fails national standards with domestic woodheaters known to be responsible for in the order of 95% of particle emissions. Motor vehicles are also a significant source of dioxin with desktop studies during the late 1980's suggesting that Tasmania's motor vehicles emit 10 times the dioxin that a pulp mill proposed at the time would emit. The mill proposed by GNS would emit a minor fraction of that previously proposed mill.
2. "I don't believe that only steam will come out of the boiler stacks".
Comment: Buring of the waste black liquor is standard pulp industry practice. It is valuable as an energy source. It is no more toxic or hazardous than the combustion of other fuels and with modern boiler designs will NOT emit visible smoke. It is generally regarded as a relatively clean energy source and does not contribute to global warming. It is renewable (unlike gas, oil, coal). The mill will be completely self powered from this source apart from during startups following maintenance shutdowns etc. Surplus energy will be fed into the grid where it will displace electricity from fossil fuels.
As previously stated, air pollution in the region is almost exclusively the result of domestic woodheaters.
3. The mill will use a lot of water and supplies are not adequate.
Comment: GNS proposes a dam to supply water to the mill. 50km away from the mill site, Northern Tasmania receives the outflow of the Poatina Power Station (hydro-electric) which diverts water which would naturally flow south towards Hobart. Flows in the Tamar River are thus well above natural levels particularly during Summer. Trevallyn Dam, another hydro scheme in suburban Launceston, has available far more water than the mill could possibly use. If necessary, a 50km pipeline could connect this major water source to the mill although GNS does not consider this to be necessary on the basis that its propsed smaller dam should be adequate.
In short, there is no problem with water - just a matter of building the infrastructure which GNS proposes to do.
4. The mill will use native timbers.
Comment: The issue of logging is separate to the mill itself. The proposed mill involves processing of timber that is presently exported unprocessed and does not involve additional logging. In the past, the economic solution to the loss of major development projects in Tasmania has been to increase logging as an alternative industry. 40% of the land mass of Tasmania is parks and reserves including the large World Heritage Area.
5. The mill will impact local residents and real estate values.
Comment: The proposed mill is located at Bell Bay. The entire area is zoned "Major impact heavy industrial" and residential development is prohibited. The aluminium smelter (Comalco (Rio Tinto)) opened in 1955, the TEMCO ferro-alloy plant (BHP Billiton) opened in 1962 and the Bell Bay Power Station opened in 1971. Also in the area are a major port, fuel terminal, and Medium Density Fibreboard manufacturing plant. An automotive wheel casting plant operated at Bell Bay some years ago. The proposed mill is on the same site as the existing wood processing mills and ship loading facility operated by GNS.
Objections from "local" residents thus seem to be rather questionable. A bit like living next to an airport and complaing about planes. The area has been promoted as heavy industrial since immediately after World War II. Directly opposite on the other side of the Tamar River is an operating gold mine.
6. The stack is too high.
Comment: The proposed height of the chimney stack is 120 metres. This is the exact same height as the nearby Bell Bay Power Station and is relatively short for an industrial stack (it doesn't need to be too high when not much is going to come out). This is considerably shorter than the stack at Newport (Melbourne). The stacks at Loy Yang (Vic) are more than twice this height. Likewise that stacks at Bayswater, Eraring (both NSW), Tarong, Callide (both Qld) etc. are higher than 120m.
7. It will look ugly.
Comment: It's a heavy industrial zone, what did anyone expect? The power station, wood mills, fibreboard plant, aluminium smelter, ferro-alloy plant, port and bulk fuel storage aren't exactly objects of beauty either.
As I have stated, judge for yourself the merits or otherwise of this company and it's projects. I am simply alerting those interested to the share price action and outlining the major public issues that have been raised so far, most of which seem of a political rather than factual or scientific nature.