More than 6000 rail sleepers are needed for immediate repairs to the damaged 16.5km section of main-line rail track between Clinton and Balclutha.
Ultimately, up to 20,000 sleepers may need to be replaced.
The work is scheduled to be completed by tomorrow afternoon.
The line was closed on Friday night after two rear wagons on a northbound freight train derailed at Warepa, about 17km south of Balclutha, causing extensive damage to the track.
KiwiRail public affairs general manager Kevin Ramshaw said the wagons, which each contained 20 tonnes of coal, stayed upright and connected to the train, and the engineer was unaware of the derailment until alerted by train control.
A crew of about 50 people, made up of Clutha locals and contractors from Christchurch and the West Coast, have been working in 12-hour shifts to repair the damaged track.
"The biggest task and challenge we face is to replace the sleepers," he said.
Eight highrail excavators, equipped with sleeper handling fittings are being used to replace the damaged sleepers.
On straight areas of track, one in every four sleepers had been damaged, while on curved sections, every second sleeper needed replacing, Mr Ramshaw said.
Ultimately, up to 20,000 sleepers might need to be replaced, he said"Crews started working on Friday . . .
"As far as I know, everything is working to plan."
Mr Ramshaw said if the weather held, the line should be operating tomorrow afternoon.
Fonterra southern regional logistics manager Richard Graham said the derailment had created "no great issues" for the company which usually sent 60% of milk powder production from its Edendale plant to Port Chalmers by rail.
"We've increased our trucks slightly, just over the next two weeks, just by a few trucks a day.
"Obviously, coming to the end of the season the pressure's right off us so it's quite manageable for us, really."
Mr Graham said the company had storage available at its Edendale plant.
"If it was going to happen, it was good it happened at this time of year rather than at the peak of the season."
