A proposal by the State-owned forestry company Coillte to take an 80

per cent share in the Northern Ireland sawmill company Balcas has run into objections from sawmill owners in the Republic, concerned that such an arrangement could undermine their businesses.

Coillte is the only supplier of logs in the Republic, and Balcas, as the largest timber milling operation in Ireland, is its biggest customer. Sawmill owners say that if Coillte buys its own mill, it will be able to exert too great a control over the price of timber.

They may now refer the proposed purchase to the Competition

Authority.

Balcas, which is owned by the Duke of Abercorn, has operations in

Magherafelt, Enniskillen, and in Co Leitrim. It also has pallet mills in Belfast and in Co Kildare. Its turnover last year was around

£40 million.

Coillte plans to purchase the 80 per cent stake for £3

million. Yesterday the Irish Timber Council urged the Minister for the Marine and Natural Resources, Dr Woods, to block the move. In a statement they said it would "put hundreds of jobs in sawmilling in various rural communities at risk, while at the same time bolstering jobs in the North," while also amounting to a further unwarranted extension of Coillte's monopoly position.

The council also pointed out that the Oireachtas all-party committee on semi-state bodies recommended that Coillte should not be allowed to get involved in sawmilling.

The ITC's chairman, Mr Pat Twomey said that the proposal by

Coillte was "outrageous and bizarre."