Production of white pulp and graphic paper at Opal Australian Paper's Maryvale mill in Victoria's Latrobe Valley has permanently ceased, meaning up to 200 job losses.
White paper production at the mill was impacted late last year after state-owned supplier VicForests was ordered to scale back harvesting.
"Despite our best endeavours, Opal has been unable to source viable alternative wood supplies to replace the shortfall from VicForests," Opal said in a statement on Wednesday.
"As a result of this situation, Maryvale mill produced its last ream of copy paper on 21 January 2023."
The Victorian Supreme Court in November found VicForests failed to adequately survey logging coupes for two protected possum species in a decision it is appealing.
Production workers were stood down but were being paid until the middle of this month under a Victorian government guarantee.
Opal's Japanese parent company Nippon Paper Group announced the closure of the mill, which opened in 1937 and is one of the region's largest employers.
It's the latest blow to the Latrobe Valley ahead of the scheduled closure of Yallourn and Loy Yang A coal-fired power plants in 2028 and 2035 respectively.
The Construction, Forestry, Maritime, Mining and Energy Union blamed the early end of white paper production in Australia on the Victorian government's mismanagement of the sector and Opal's "bumbling" approach.
"Both the government and the company failed to take the actions we implored them to take in order to prevent this disastrous outcome," CFMEU national secretary Michael O'Connor said.
"The closure of white paper production at Maryvale means the loss of 200 jobs in the Latrobe Valley region, devastating families and communities."
Australian Manufacturing Workers Union's Gippsland organiser Steve Dodd said Opal wanted to make 32 of its maintenance workers redundant.
The AMWU and the Electrical Trades Union could take the company to the Fair Work Commission to contest proposed redundancy numbers after a period of consultation.
"It's been an absolute farce," Mr Dodd told AAP.
"We've asked for a whole range of information. They just come back bulls***ing to us. They haven't genuinely tried to mitigate the impact."
Opal has turned its back on generations of loyal Latrobe Valley workers and its exit is a "kick in the face", the ETU said.
Office Brands saw the closure coming after the mill started winding back operations.
They've been sourcing paper internationally and are calling for an end to white paper import tariffs given there's no longer an Australian industry to protect.
"I don't think anyone else is going to set it up in Australia unless they get the same level of protection Opal had from the federal government," chief executive Adam Joy said.
"The paper is going to continue to be more expensive, especially while the tariffs are in place."
The Victorian Forest Alliance said the mill had driven the decline of threatened species for decades and a 30-year contract with Nippon to supply woodchips from Victorian native forests until 2030 was never going to be sustainable.
The Victorian government is working with the company to minimise redundancies and offer support services to affected workers.
"It's really important the company, Opal, stand with their workers," senior minister Ben Carroll told reporters.
In 2019, Premier Daniel Andrews said a $120 million industry support package would safeguard jobs at the Maryvale mill after announcing a ban on native forest logging by 2030.
"Daniel Andrews said those jobs would be protected. Those jobs are now going. This is a travesty," deputy Victorian Liberal leader David Southwick said.
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