A MAJOR forestry construction in the region has been cancelled with results from a study showing it is not feasible to develop due to changed market conditions.
The announcement follows an extensive two year study, costing more than $1m into the business and investment viability of the proposed greenfields project.
OneFortyOne Plantations has confirmed it is not feasible to develop a particleboard mill at Tarpeena.
OFO chief executive officer Linda Sewell told The Border Watch its feasibility study concluded “while the mill may have made a positive contribution economically, the significant industry changes including strong domestic market growth and two local OFO acquisitions over the last two years have significantly changed market conditions”.
“OFO will focus on its immediate opportunities, including investing in and bringing together the activities of its Jubilee Highway Sawmill and forestry businesses,” she said.
“However, we will review any new opportunities for investment that may emerge.”
OFO’s board agreed to the feasibility study into the construction and operation of the mill on leased land in September 2016.
If the study results were favourable, the project could have led to a capital investment of around $150m and the creation of more than 50 jobs.
The mill could have been in operation by next year supplying domestic and export markets.
Ms Sewell said OFO has evolved from being a forest grower only after taking operating control of the Jubilee Highway Sawmill and its associated wood chip operations in January.
In addition, OFO’s competitor The Borg Group has acquired certain manufacturing assets of Carter Holt Harvey Pinepanels in Mount Gambier.
“The domestic market has changed dramatically and is the strongest it has been in over 15 years,” she said.
“We recognise our forest is a finite resource and there is no excess fibre available now, which is also why we have recently stopped exporting saw log.
“To invest in further greenfields capacity does not make sense when you consider these changes in ownership, domestic market strength, sector activity and the alternative opportunities.
“However, by investing in the Jubilee Highway Sawmill and associated wood chip operations we have been able to keep more than 300 people employed within the region.”
Reacting to the announcement, Wattle Range Mayor Peter Gandolfi said although he was disappointed the proposed construction of the mill will not go ahead, he “understands it has been a commercial decision OFO needed to make”.
“I’m sure there will be further opportunities in the near future where fibre could be utilised, including biomass opportunities,” he said.
