ANZ Bank appears to have decided against funding Gunns' $2 billion pulp mill in northern Tasmania, dealing a blow to the controversial project.
Industry and anti-mill sources yesterday confirmed a report that ANZ, which has agonised over the Tamar Valley mill, has rejected a role as financier.
Such a decision could further delay a start to construction, but Gunns is not believed to have been deterred from its goal of building a "world-scale" mill.
An ANZ spokeswoman refused to confirm or deny the decision. The bank may be waiting for Gunns, its long-time corporate banking client, to make an announcement.
A Gunns spokesman said as no announcement had been made to the stock exchange, it was "pure speculation", and the company had no further comment.
The Business Spectator website linked tight credit conditions to ANZ's decision. ANZ also has been under public pressure to reject the mill, which lacks community support in Tasmania, according to opinion polls.
Advocacy group GetUp said ANZ faced a "volcanic" reaction from customers and shareholders if it financed the mill, with 31,500 GetUp members emailing concerns to the bank.
The mill would be 80% reliant on Tasmanian native forests at start-up, and dump 73 million litres of treated effluent per day into Bass Strait.
The ANZ has been Gunns' main banker for 22 years. After the timber company's last annual meeting, Gunns executive chairman John Gay told The Age that ANZ was leading the project.
"The financing of the mill is being held and dealt with by ANZ, and they have got banks around the world as part of the Gunns syndicate," he said. "We will get the finances."
Gunns told analysts in March that final terms were being negotiated for project financing.
Timber analyst Robert Eastment, of IndustryEdge, said: "For a project this size to achieve funding in the current credit climate internationally will always be a challenge." Gunns could go back to shareholders for partial equity, he said.
Macquarie Bank is reportedly considering involvement.
Green Senator Christine Milne said ANZ's withdrawal would leave the project in dire straits, while the Wilderness Society's pulp mill campaigner, Paul Oosting, said it would be very hard for new financiers to move quickly on a decision.
Gunns aims to start mill construction next month.