Melbourne, Victoria: In filings lodged today in the Supreme Court of Victoria, Paper Australia Pty Ltd (trading as ‘Opal’) commenced proceedings against the State Government of Victoria for $402 million in damages following the Government’s breach of the Wood Pulp Agreement (Agreement) to provide a stable supply of wood to Opal, the operator of the Maryvale Paper Mill in the Latrobe Valley, Victoria.

Opal (part of Nippon Paper Group) is a paper and packaging group with sites across Australia (including a number in Victoria) and New Zealand. The Maryvale Mill is a major employer in the Latrobe Valley, employing more than 500 team members on the site directly, with additional jobs created externally in the wider community and supply chain. The Mill has been a cornerstone of the Latrobe Valley for more than 85 years, deeply woven into the social and economic fabric of the region. The Mill’s direct economic output generates an estimated contribution to the Latrobe Local Government Area of more than $622 million annually.

In May 1996 the Victorian Government entered into the Agreement with Amcor Limited, the then operator of the Maryvale Mill, to supply pulpwood, with the Agreement expiring in June 2030. In 1998, Amcor assigned its rights under the agreement to Paper Australia Pty Ltd (now trading as Opal).

Under the Agreement, the Victorian Government’s state-owned enterprise VicForests was providing Opal with eucalypt wood, a critical raw material for white paper production. In November 2022, the Government advised Opal it would be unable to fulfill its contractual obligations to supply wood. For the 2022/23 Financial Year, a reduced supply of wood was supplied to Opal by VicForests and subsequently, the Victorian Government made it clear that it did not intend to supply any wood to Opal in the future, forcing Opal to terminate the Agreement in May 2023.

With no viable alternatives available to replace the discontinued wood supply, Opal was forced to close its white pulp and paper production at the Maryvale Mill in early 2023, resulting in the loss of more than 400 jobs across Australia. 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.

Opal has sought to reach a negotiated outcome with the Victorian Government. However, 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 by the Victorian Government.

Opal hopes that, with the case now before the Supreme Court of Victoria, the matter will be determined fairly and in a timely manner, providing resolution not only for Opal and the Victorian Government, but also for the Maryvale Mill, the Latrobe Valley, and the wider Victorian community.

As the matter is now before the court, Opal will not be making further comment.

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