Police and Fire Service officers inspected the site yesterday morning and confirmed the fire began in a rubbish drum on land next to the Scrap Metal Man car storage yard in Opetuni Ave, Southland fire risk manager Mike Cahill said yesterday.
The fire, which was noticed about 5.45pm on Tuesday, spread rapidly, fanned by strong winds.
Firefighters worked for six hours to contain it and save surrounding industrial buildings and some vehicles.
Scrap Metal Man, owned by Robert Butler and business partner Tania Conner, exports engines, parts and car bodies.
It also operates a green waste collection service and buys scrap metal.
Mr Butler estimated the company had lost about $250,000-$300,000 worth of stock, plus a green waste collection truck valued about $40,000.
Two diggers and a forklift were seriously damaged.
The burnt cars were not insured, he said.
''I hope the neighbour has public liability insurance. We're a bit out of pocket and as far as I know, the guy next door is culpable.''
Mr Cahill said the rubbish fire had been left unattended, but the Fire Service was unable to effect a prosecution and liability was a matter between Mr Butler and his neighbour.
Senior Sergeant Maggie Windle, of Invercargill, said yesterday detectives were still investigating the fire to determine ''the full picture'' and it was too soon to say what the outcome would be.
Mr Butler said all was not lost financially, as some of the burnt vehicles still had some value and could be exported.
The alarm was raised by an off-duty firefighter who saw the fire as he was running along the banks of the Otepuni Stream, Mr Butler said.
''Everyone is very grateful to him. If he hadn't seen it it could have been a lot worse ...''
