A fire at the old paper mill in Mataura poses no risk to the toxic ouvea premix stored there, Fire and Emergency New Zealand says.
The fire is at the hydro outfall, which used to power the paper mill, but is not the part of the site where the premix is stored.
Fire and Emergency New Zealand said more than 30 firefighters were battling the blaze, which was contained.
"There is currently no danger of the fire getting near where the ouvea premix is stored.
The fire currently covers a 10sqm area, in the hydro generator.
"Firefighters are currently working to isolate the power and will extinguish the fire once it is confirmed the power isn’t generating."
A Kana St resident, who wished to remain anonymous, said her children were freaked out.
She was told about the incident by her neighbour.
“He said get back inside, there’s a fire at the paper mill.”
She had lived there for three years and said they needed to fear for their lives with the substance being stored there.
“Especially with the floods, it’s dangerous to have it stored in the middle of a little town.”
A Fenz spokeswoman earlier said access to the site was difficult and through a small manhole, and firefighters were waiting on a caretaker to arrive to get access and determine the extent of the blaze.
In a press release police said the blaze was "large".
Sort out the Dross action group spokeswoman Laurel Turnbull said the fire was under control and it did not present any risk to the public.
"I'm aware that there is a fire - it is on the hydro which generates electricity at the mill, so it is over the back of the mill, beside the river.
There was an "awful lot of smoke" which was made to look worse by the strong winds.
She said it was scary for people every time something happened at the plant.
"The sooner it goes, the better but as soon anything goes wrong, emergency services are right into it, so the public can be reassured that the emergency people know exactly what they are dealing with."
Emergency Southland manager Angus McKay earlier said police and fire crews were still accessing the site to check if the fire presented any danger to the premix.
"The initial reports are that the fire started at the hydro-generator plant.
"The building is right next to the site [where the premix is stored] but it has some kind of separation between."
He could not inform how much ouvea premix was still stored in the site, but said it was a "considerable" amount as the work to remove the substance would take years.
Gore District Council chief executive Stephen Parry said today about 15% of the ouvea premix at Mataura has been removed so far.
"We have approximately 8,500 tonnes stored there at the moment."
He had been made aware of the fire but could not provide any further detail.
The work — which started in October last year — was expected to be completed in two and a-half years.
A Fenz spokeswoman said two appliances from Mataura were at the scene of the fire as of about 1.50pm, and two more were on the way from Gore.
The building was involved in fire, the spokeswoman said.
A reporter at the scene said it appeared to be at the paper mill. There were three fire appliances were at the scene and traffic was being directed from the area by police.
The reporter could not see any smoke, but firefighters were entering the building wearing breathing apparatus.
NZTA has closed SH93, which runs from Clinton to Mataura.
Police said road closures and a number of detours were in place due to a "large" fire on Kana St (SH93). Traffic was being diverted up SH1.
Motorists were asked to avoid the area and expect significant delays. The fire was reported about 1.40pm.
Toxic aluminium dross is stored at the site, which residents have long been concerned about. The concerns were heightened when the area was flooded in February.
The dross, a byproduct of aluminium manufacture at the Tiwai Point smelter, could produce poisonous ammonia gas if it came into contact with water.
It is stored in a former paper mill beside the Mataura River; community fears about the dross have been heightened by floods in the town in 2018 and in February this year.
