Workers at Victoria's Heyfield timber mill may not all keep their jobs under the state takeover but there is hope they can remain in the region.
The state Labor government has an in-principle agreement to buy the mill after Australian Sustainable Hardwoods and owner the Hermal Group planned to start a shutdown in August.
AAP understands the mill will cost more than $42 million.
Premier Daniel Andrews could not guarantee jobs at the mill when he was asked how many of the 250 workers would stay on.
"We'll fight for every job that we can possibly secure, that's always been our view," Mr Andrews said on Tuesday.
The government said there will be no forced redundancies, but it also planned to run the mill at a reduced capacity of 80,000 cubic metres of sawlogs.
ASH said earlier this year it needed at least 130,000 cubic metres a year to continue operations.
There is now speculation workers could remain in the region, with the state government funding a timber plantation and the Latrobe Valley Authority's retraining programs.
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."
But the opposition remained adamant jobs cuts could be significant and continued to question why the mill wasn't just being supplied with more wood.
"We may see most, if not all, of those jobs go in the medium to longer term because of cuts to supply that the Andrews Labor government has inflicted on this business," shadow attorney-general John Pesutto said on Tuesday.
Agriculture and Regional Development Minister Jaala Pulford has said environmental factors such as the endangered leadbeater's possum and the amount of timber available had to be considered, but promised the management would remain the same after the transition.
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