Scrapped Pulp Mill Creates Ripples in Australia

THE abandonment of one of the biggest resource projects in Australia's history, a planned $1 billion Tasmania pulp mill, is sending economic and political shock waves through the country. Initially, it seemed the project couldn't miss. It was to be the most technically advanced, environmentally safe mill in the world, said joint venture partners North Broken Hill Peko of Australia and Noranda Forest of Canada.

Prime Minister Bob Hawke warmly welcomed the mill. It was to create 2,400 construction jobs and 300 mill jobs. Too, the pulp exports would have knocked $250 million a year off Australia's trade deficit.

While the Tasmania state government agreed to the companies' requests for looser environmental guidelines, federal scientists told Mr. Hawke the environmental risks of the project outweighed the economic gains.

Last week, after Hawke requested further environmental studies and tighter controls, the partners canceled the project.

The mill's demise has created a fissure in Hawke's Australian Labor Party power base, the Australian Council of Trade Unions. The union council's president, Simon Crean, wants to resurrect the project.

Forest industry officials say scrapping the project jeopardizes $11 billion in investments, including plans for several other large pulp-mill projects. Australia imports more paper products than it exports, creating a $1.3 billion forest-products trade deficit. The pulp mills are part of an effort to close the trade gap by developing more highly processed timber products.

Treasurer Paul Keating sought to reassure foreign investors last week that Australia still wants their money and supports similar projects. But he added, ``Mills of this variety and this magnitude should operate in an environmentally acceptable way.''

Conservationists are hailing the project's cancellation as a major victory and as indicative of the Hawke government's recognition of the increasing environmental awareness of the Australian voting public.

One of the key environmental concerns was that the mill's discharged waste effluent might harm fish and crops in areas near the mill. The Hawke administration wondered whether the discharge could damage Australia's $620 million fish-export industry.

Most pulp mills use chlorine to bleach paper pulp. A byproduct of the process is dioxin, a highly toxic chemical. A New York Times article - widely circulated here on Wednesday - reports two studies by the US Environmental Protection Agency found fish and water downstream from a large percentage of US pulp mills contained levels of dioxin exceeding federal guidelines.

And, the Vancouver Sun recently cited a government study that said most Canadian pulp mills violate that country's national pollution guidelines.

The EPA and several US states are stiffening pollution guidelines to reduce the use of chlorine. And mill operators are taking steps to cut down on the amount of dioxin discharged. But these studies and the Hawke government's environmental stand likely will send a message worldwide that further steps must be taken before new chlorine-dependent pulp mills can win public support, experts here say.