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

A Japanese paper company is suing the Victorian government for $402 million, alleging it broke an agreement to provide a steady supply of native timber to the company’s 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 was demanding significant compensation.

The company operates the Maryvale Mill in the Latrobe Valley – one of the biggest employers in the region – which in 2023 closed its white paper operation, 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 pulp wood 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, expediting it from the planned 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 replace the discontinued supply, which led to the loss of more than 400 jobs and “substantial loss and damage” to the business.

Opal said it had sought to negotiate compensation with the government but had failed to reach an agreement, leading it to take the matter to court, where it 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,” it said.

An Allan government spokesperson said it would be inappropriate to comment because the matter was now before the courts.

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

The government says it has spent a total of $1.5 billion to support the industry, including businesses, workers and communities affected by the end of native logging.

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