There are fears for more job losses in Gippsland, with a mill that processes wood from sensitive Victorian forests warning 250 jobs are under threat unless a substantial supply of timber is secured soon.
The closure threat from Australian Sustainable Hardwoods in Heyfield comes at a difficult time for the Andrews government in Gippsland, after energy giant Engie announced it would close the Hazelwood power plant at Morwell.
The Leadbeater's possum, one of Australia's threatened small species.Credit:Justin McManus
The mill processes Victorian ash species hardwood, including from the politically and environmentally-sensitive central highlands, home of the endangered Leadbeater's Possum. It is a major employer in the town of 2000 people.
State-owned agency VicForests says the supply of ash timber needs to be reduced from current levels because of modelling around future timber resources.
Mill management will meet with staff on Thursday to outline their plight. It is understood without a contract for supply of at least 120,000 cubic metres of wood by June next year, it will be forced to shut down.
Pitcher Partners has already been engaged to look at closure options.
The mill processes 155,000 cubic metres of hardwood every year and has over 250 direct employees and contractors, the company says.
A spokesman said multiple approaches have been made to the Andrews government, including Minister for Agriculture Jaala Pulford for over two years.
The Age understands VicForests has offered contracts of 80,000 cubic metres for next year and 60,000 each for the two following years.
VicForests acting chief executive Nathan Trushell said it was in discussions with the Heyfield business regarding a future sales agreement.
"Any future sales agreement offered to ASH will be based on lower supply levels to ensure this aligns with available timber resources," Mr Trushell said.
Environmental campaigners say that there is simply not enough timber left in Victoria's forests to supply the mill because of over-logging and bushfires.
MyEnvironment spokeswoman Sarah Rees said authorities had known for some time the resource was dwindling.
"We've known for a long time that the resource cliff was coming, Black Saturday and over-logging killed its future, that's why the government set up a taskforce, now we have two extinctions; a possum and a timber industry," Ms Rees said.
It is understood Ms Pulford is prepared to meet the company.
Local Nationals MP Tim Bull said it was a disgrace that the minister had not yet met with the company owners despite their requests for two years.
"When there are this many jobs on the line, particularly on the back of Hazelwood, it is astounding the minister has not visited Heyfield and met with the mill owners and community leaders and she should do so as soon as possible," Mr Bull said.