The Victorian government will invest $120 million in a soft timber plantation in the state's southeast.
Hancock Victorian Plantations will match the spend to buy, lease and manage more than 14,000 hectares of softwood plantations, an area equivalent to 7000 Melbourne Cricket Grounds.
It is expected 16 million new trees, mainly pine, will be planted in Gippsland in eastern Victoria under the deal.
The state government claimed the new plantation would underpin 2000 new and existing jobs in regional Victoria but did not confirm how many new jobs would be created.
Victorian Agriculture Minister Gayle Tierney said plantings would begin in 2023, subject to final approvals.
"This is the biggest investment in Victorian history in new plantation establishment - making sure we have a strong, sustainable timber supply for decades to come," she said.
"This is all about guaranteeing the jobs in the timber sector that Victorian workers and communities rely on.
"As we expand Gippsland's softwood supply, we're delivering new opportunities for our timber industry."
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HVP Plantations CEO Stephen Ryan said the company welcomed the opportunity to work with the government to deliver "one of the most significant plantation forestry developments in the last 20 years".
The Victorian Forest Products Association backed the announcement and said 16 million trees would help close the current supply shortfall.
"Victoria imports on average 36 per cent of its softwood demand and desperately needs to secure its future timber and fibre supplies," VFPA CEO Deb Kerr said in a release.
"Originally promised as the transition for the Gippsland hardwood industry, with plantings only expected to commence from 2023, it will still leave a future gap in harvestable timber and fibre from 2024."
Ms Kerr also lauded the promised environmental benefits of the project.
"I also acknowledge the government's recognition that these new plantings will have a substantial impact mitigating climate change by removing approximately 7.8 million tonnes of carbon dioxide from the atmosphere over the next 25 years," she said.
The announcement came days after the Victorian Greens called for the state's ban on logging native forests to be brought forward from 2030 to 2023 and for forestry workers to be redirected to emergency services.
"By redeploying forestry workers to form a special emergency and disaster response team, we can use their existing skills in something we desperately need in Victoria," Victorian Greens deputy leader Ellen Sandell said.
"Ending native forest logging now, rather than in 10 years, will help the environment and save Victoria $205 million."
The Andrews government said Victoria was home to the largest timber plantation in Australia, with five out of six trees harvested across the state from plantations.
Australian Associated Press
