The Victorian Government has acted to provide certainty for jobs in the timber industry and the town of Heyfield, offering Australian Sustainable Hardwoods (ASH) terms for a new supply contract that would secure the immediate future of the Heyfield timber mill.

The offer made to ASH was for a three year contract consisting of one year’s timber supply at 80,000m3 and two years at 60,000m3. The offer also included a $5 million industry support package including support for a business case for retooling.

The Government has been advised by ASH that it would not accept the terms of this offer. VicForests will continue to honour the existing supply agreement until it expires on 30 June, 2017.

VicForests’ consistent advice to Government has been that it was not able to offer ASH a longer timber supply agreement, or an agreement for greater timber volumes, without risking the future of Victoria’s timber industry.

The terms offered to ASH by VicForests were consistent with the agency’s legislated obligations – to manage Victoria’s forests sustainably and in the long term interests of Victoria’s forest industries.

The Government remains committed to the Heyfield mill remaining operational as it plays a vital role in the local community and across the timber products industry, including in the Latrobe Valley.

The Government believes that the Heyfield mill can continue to operate at the proposed volumes. The majority of Victoria's mills currently operate with timber supplies significantly below the levels offered to ASH.

After being advised of ASH’s decision to reject the proposed timber supply agreement, the Government has requested ASH management work with Government to facilitate the sale of the Heyfield mill to a new operator to safeguard an equitable and fair outcome for workers and the community.

In the event that a new operator cannot be found, the Government is prepared to ensure that operations at the Heyfield mill continue as per the same commercial terms offered to ASH today.

The Government will investigate all options to achieve this objective, and pending an independent evaluation, does not rule out assuming operation of the mill at a fair and reasonable value in the event that it becomes necessary.

We do so because our priority is protecting local jobs, and the future of the community.