Fulton and Hogan has a $649,401 contract with the Waitaki District Council to build the erosion protection, which will link with work already done by Kiwi Rail to protect its goods yard and the Oamaru railway station.
Erosion has been eating away at the foreshore, exacerbated by heavy seas at the end of May, destroying earlier protection work.
The sea cliff is moving inland towards the historic Freezer Building, associated with the preparation of meat for New Zealand's first frozen-meat shipment from Totara Estate.
Rock from a quarry at Enfield is being trucked to the foreshore for the sea wall.
The council has resource consent from the Otago Regional Council for the work, which will be funded by a loan repaid 80% by Oamaru ratepayers, with 20% paid for by the district's ratepayers.
Penguins using or nesting along that area of foreshore will be protected during the work and moved if necessary.
Once the work is completed, the council will be left with erosion cutting into the Department of Conservation penguin reserve on the foreshore south of Oamaru Creek to Holmes Wharf.
Protection work on that section, which contains part of Oamaru's Harbour-Tyne Sts historic precinct, is scheduled to be done in 2011-12.
