Japanese-owned Pan Pac Forest Products will pour $23 million into doubling capacity and creating jobs at its Milburn sawmilling plant.
The company bought part of the former Southern Cross Forest Products company out of receivership 14 months ago.
Pan Pac, a subsidiary of Japanese company Oji Group Holdings, plans to double processing of mainly export grade radiata pine to 100,000cum per year, boost jobs at Milburn, just north of Milton, from 29 to 35, and create site capacity for further expansion.
Pan Pac general manager Michael Reaburn said the company would initially continue to operate from both the existing Milton and Milburn sites during construction, but the aim was for a single ‘‘state-of-the-art production facility'' at Milburn, doubling existing capacity.
"The plan involves building a new kiln and installing a new boiler at the Milburn mill. Construction will take just over a year and is due for completion in April 2017,'' Mr Reaburn said yesterday.
A large shed and new dry mill were also part of the project, and there would be a small number of electrical and mechanical contractors employed, he said.
All logs would be sourced locally from Wenita, City Forests and smaller forest owners.
The timber would be processed into sawn lumber.
Mr Reaburn declined to say how much Pan Pac paid for the Southern Cross sawmilling and drying assets at Milburn and Milton, which was Pan Pac's first investment beyond Hawkes Bay.
Work was due to start next month, using local contractors and suppliers, but Mr Reaburn said some specialist equipment would need to be imported from Europe and North America.
Southern Cross was placed in receivership by the ANZ in March 2014, with initial estimates it owed up to $57 million.
At the time it employed about 400 staff, mainly around Otago.
The Overseas Investment Office approved the sale of Southern Cross to Pan Pac in November 2014 and Pan Pac signalled the likelihood of an investment boost at the time.
"About 85% of the product is destined for the export market and we intend to ship the product out through Port Chalmers,'' he said.
Pan Pac was established in New Zealand 43 years ago, with a sawmill and pulp mill north of Napier in Hawkes Bay, owning 35,000ha of forests, employing 370 staff and 450 contractors from around the region.
Pan Pac has a turnover of more than $350million annually, exporting to China, Japan and the US, plus some domestic sales.
"The Otago operation is an important part of our growth plan and helping meet the expanding demand for lumber in the Asian market,'' Mr Reaburn said.
Once Milburn had been been upgraded, the Milton facility would be closed and the operators would transfer to the expanded facility, he said.
