Take the 150,000 hectares of plantation timber Gunns now controls in Tasmania — the amount the company says it needs to feed its proposed pulp mill — and double it over the next five to eight years. Do that and you can build a second pulp mill.

That’s what executive chairman John Gay says Gunns is planning. The second pulp mill is a “maybe”, but the size of the plantations apparently is a sure thing.

“The size of the plantations by 2012 or 2015 would lend (sic) to grow another pulp mill or stay in export woodchips which the company doesn’t really want to do long-term,” Gay told Bob Gottliebsen in last night’s Eureka Report interview.

Gay says the first pulp mill is “99 per cent certain” of getting approval through the Tasmanian Government. The present 150,000 hectares produce between 3.5 to 4 million tonnes of wood a year, enough to support a one million tonne pulp mill.

Gottliebsen asked why Gunns sells its timber MIS so much more cheaply than the competitors — $6000 a hectare. Gay answered:

Well, we started off with a reasonably low price because our view was that we wanted to get a large amount of trees in the ground to develop a pulp mill and we set the prices with a very reasonable margin for Gunns and a good investment for the investors and we’ve stayed on that line.

By comparison, Great Southern Plantations’ current project is charging $10,000 a hectare, 66% more than Gunns.