A new large-scale timber processing plant to be built in Rotorua will create 40 jobs in the region.

Red Stag Wood Solutions announced today it will build a $20 million-plus Cross Laminated Timber plant at its 95ha wood processing site in Waipa.

Group chief executive Marty Verry said it was a proud moment for Red Stag and Rotorua, and anchored the region as the wood processing capital of New Zealand.

"Cross Laminated Timber (CLT) is a product on a rapid growth curve globally," Verry said.

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"It is one of the 'massive timber' group of products, along with others such as glulam, that is opening up the mid- and high-rise building market to wood.

"In New Zealand there is strong demand, and praise needs to be given to XLam in Nelson for the leadership it has shown in developing the CLT market alone to date. We see the need now for a scale North Island producer so that between us we take the product mainstream."

Verry said the company's vision was that wood would be the norm in mid-rise buildings by 2030.

"I can see the KiwiBuild target being achievable in the early 2020s as a result."

Verry said the building would be open to the public and educational viewing - "a bit of a tourist attraction".

"Being across the road from the new mountain biking hub we can tie in the promotion for this style of construction.

"There's going to be a lot of future investment in forestry in Rotorua."

The CLT will be produced by the group's Red Stag Wood Solutions division run by managing director Jason Cordes.

Cordes said the plant was expected to generate 40 regional jobs – mostly in Rotorua.

"But more importantly it has the potential to save thousands of dollars on the cost of housing and mid-rise buildings by reducing material cost, on-site labour costs and construction time."

Cordes said Red Stag was also going to be able to help hit KiwiBuild, state housing and private sector targets with the plant.

"We will launch in 2019 and expect to be producing in excess of 50,000cu m of CLT within two years. That is the equivalent of around 2000 housing units."

Minister for Forestry Shane Jones said he welcomed the investment on top of his enthusiasm for the Wood First policy.

"I will be meeting with fellow ministers shortly to discuss how this policy can have greater practical effect."

Rotorua Chamber of Commerce chief executive Allison Lawton said it was fantastic news for Rotorua.

"This initiative builds on Rotorua's Wood First policy and ensures our Forestry and Wood industries are at the forefront nationally and internationally.

"This type of confidence, and investment, is vital to ensure continuing economic growth and development, for attracting new investment leading to more jobs for our city."

Rotorua mayor Steve Chadwick congratulated Red Stag on its decision, with the forestry sector contributing about 15 per cent of Rotorua's GDP.

"This latest investment has the potential to bring not only economic benefits, but also social outcomes in terms of additional jobs and ultimately, improved and lower-cost housing, both of which align with what we are trying to achieve for our district in the long term.

"It also aligns with the district's Wood First policy and shows continuing confidence in our growing region. It's fitting that it is Red Stag taking this new build product innovation to the next level."

Deputy mayor and economic development portfolio lead Dave Donaldson said it was wonderful news for Rotorua and for New Zealand.

"We are extracting added value from our primary resources rather than seeing that value added elsewhere including off-shore.

"It shows confidence in Rotorua as a great place to do business with great connectivity to resources and business routes.

"It also provides further confidence in growth assumptions that are informing our district spatial plan which aims, among other things, to increase the availability of industrial land."

A proviso of the announcement is that Standards New Zealand adopts a standard requiring full penetration of treatment chemical in CLT, to provide assurance against decay.

Typically this is the commonly used boron, which has been proven for decades to be safe and effective.

Rotorua's forestry industry
• Rotorua sits at the heart of the country's forestry industry
• Almost half of New Zealand's wood is harvested from central North Island forests within 100km of Rotorua
• Forestry and wood processing accounts for about 15 per cent of Rotorua's GDP
• 11 million cubic metres of logs are harvested each year from around Rotorua
• 4 million cubic metres of logs were exported in raw log form, mostly to China
• The remaining 7 million cubic metres of timber was processed into higher value products
- Rotorua Lakes Council