The Victorian government is facing a $402 million lawsuit from Paper Australia’s Opal —one of the country’s largest paper producers—after the state all but cut off its supply of native eucalypt logs to the Maryvale paper mill in the Latrobe Valley. Opal filed its claim in the Victorian Supreme Court today, bringing an end to three years of stalled negotiations under the former Premier, Daniel Andrews, and the current Premier, Jacinta Allan.
Wood Central understands that the heart of the dispute lies in the Wood Pulp Agreement, first struck with Amcor in 1996 and transferred to Opal in 1998. Under the deal, VicForests—the state-owned logging and timber agency—committed to delivering at least 350,000 cubic metres of pulpwood every year from 2011 through 2030. That timber underpinned six decades of white-paper production at Maryvale and sustained hundreds of local jobs.
In November 2022, a tribunal found that VicForests had breached environmental laws by endangering the habitats of the greater glider and yellow-bellied glider, effectively halting native logging. As a result, Victoria supplied just 86,505 cubic metres of pulpwood in 2022–23—down from 427,993 cubic metres the year before—and informed Opal there would be no further deliveries.
Then, in May 2023, Premier Andrews moved to end native logging seven years ahead of the previously signalled 2030 phase-out. “The advice that we’ve got is that, legally, there will be no way through this if the courts have been used the way that they have, effectively to frustrate this industry,” Treasurer Tim Pallas warned at the time.
Opal says the collapse of its wood supply forced Maryvale Mill to cease white-paper manufacturing in early 2023, resulting in the loss of more than 400 jobs nationally and marking the end of 60 years of Gippsland’s white-paper production. At its peak, the Morwell site employed over 500 people and generated approximately $622 million in annual economic activity. Today, it survives on a fraction of that capacity, producing specialty papers and cardboard.
“The closure, together with the reduction in production volumes, consequential redundancies, and the severe commercial impacts on the entire Opal Group arising from the loss of its white pulp and paper business, has caused—and continues to cause—Opal to suffer substantial loss and damage,” the company said in a statement reported in the AFR today, telling the court it had “no viable alternatives” and was forced to seek a judicial determination of its losses.
According to Opal’s statement of claim, it anticipates redundancy costs of $15.4 million and lost sales damages of $386.5 million. “Opal has sought to reach a negotiated outcome with the Victorian government, but after almost three years of discussions without resolution, Opal has been left with no choice but to proceed with a court-determined outcome for the damages owed to it,” the filing reads.
Denise Campbell-Burns, president of the Timber, Furnishing and Textiles Union, called the shutdown “a debacle” for affected workers. “No amount of compensation that Opal gets from the government will reverse that situation,” she told ABC Gippsland today. “You drive through Gippsland and what were once flourishing timber towns now look like ghost towns. People move away because there are no jobs… and the towns become a shadow of what they were.”
Meanwhile, Nationals MP Melina Bath, Shadow Minister for Public Lands, said that ending native logging in 2024—seven years ahead of the planned phase-out—had done “significant harm” to local communities. “It cut off a supply chain for Opal, resulting in loss of jobs and production,” she told the ABC, stressing that the paper industry “is a respected and trusted source of employment.”
Please note: A spokesperson for Premier Allan declined to comment on the dispute, citing its sub judice status.
