Tasmanian pulp mill appears dead: Lennon

Gunns' controversial pulp mill project in Tasmania appears dead, one of its biggest supporters, former premier Paul Lennon says.

Criticised for his fervent support of the mill, Mr Lennon told a parliamentary inquiry on Tuesday that Tasmania would rue the mill's demise.

"Unfortunately, it appears at the moment that the project may not be alive. Certainly it's been shelved for a period of time," Mr Lennon said.

Tasmania, in the face of the global economic crisis, would effectively find itself up a creek without a paddle, he said.

Mr Lennon said Tasmania's economy would be under more pressure as the global credit crisis hit because the construction of the pulp mill had not started.

"The Tasmanian economy is heading into dangerous waters without a pulp mill, so I just hope that those people who have opposed the pulp mill can now find the alternative employment opportunities we are desperately going to need in this state," Mr Lennon said.

He did what he could to keep the project alive, he said.

"I think, as events unfold in financial markets in the next six or eight months, there will be a lot of people in Tasmania who will wish that I had been far more successful than I have been to date with that."

Gunns Ltd has effectively shelved its $2.2 billion Tamar Valley pulp mill project.

In September, the wood chipper advised the stock exchange there was no guarantee that it would be able to raise any of the money it needed for the project.

In October, Gunns chairman John Gay told the company's annual general meeting in Launceston that the project - initially costed at $1.4 billion - had blown out by a further $200 million to $2.2 billion and was now effectively on ice.

Mr Gay said the project's funding was at the mercy of an improvement in global financial markets and an easing of the international credit squeeze.

"There will be some period of time before financial markets stabilise. In this environment, the company will be maintaining the project in a position to proceed until funding arrangements are complete."