Police have freed protesters who had chained themselves to a conveyor belt at Ta Ann's veneer mill in Tasmania's north-west.
Environment group Groundswell had been protesting against the company's sourcing of timber from native forests.
The forestry union is negotiating a new peace package with green groups on behalf of the Forest Industries Association and is outraged by the Smithton protest.
Spokeswoman Jane Calvert says the protesters' actions are unforgivable and threaten the forestry peace talks.
"We should all be outraged," she said.
"People can have their views but running into a workplace and locking onto the machinery it's unsafe, it's bullying and it's completely unwarranted and we should not accept it from anyone." Ms Calvert says informal talks are now at risk.
The people we're sitting in a room with will condemn this as much as we are," she said.
In a statement, Ta Ann said it was disappointed by the illegal protest and urged peace talk negotiators to reach an outcome as soon as possible.
The statement said the company was no longer a logger, but a timber processor.
"Certified sustainable regrowth and plantation logs are supplied by Forestry Tasmania to its mills from areas approved by the State and Federal Governments within the Intergovernmental Agreement (IGA) process," the statement said.
Groundswell spokeswoman Lisa Searle defended the protest.
"We're not damaging any property, we're not being violent towards any of the people that are involved and our problem is with Ta Ann the company and we're basically just locked in place and ready to sit here and prevent work from happening for the day," she said.
"We think it's very important to get our message out there and we are willing to take that risk and we're willing to go to whatever lengths we need to to get our message out." The protesters were taken to the Burnie police station.