Workers from Victoria's Heyfield timber mill who do not stay on after the state takeover could still keep working in the region.
The Andrews Labor government has an in-principle agreement to buy the mill after Australian Sustainable Hardwoods (ASH) and owner the Hermal Group planned to start a shutdown in August.
AAP understands the mill will cost more than $42 million.
There will be no forced redundancies, but the government also plans to run the mill at a reduced capacity.
Premier Daniel Andrews on Tuesday could not guarantee all jobs at the mill, when he was asked how many of the 250 workers would stay on.
But there is speculation workers could be redeployed in the region through other government initiatives, including a timber plantation.
Both the government and ASH remain tight-lipped over future job opportunities.
"The state government has shown it is committed to the town of Heyfield and has everyone's best interests in mind," ASH director Clinton Tilley told AAP.
"Between now and when we settle there will be no job losses.... Once the government takes over I can't comment on what their plan is."
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