NELSON - Takaka residents are anxiously waiting for a decision by Fonterra whether it will rebuild its Takaka dairy factory, seriously damaged in a huge blaze this week.

Fonterra expects to decide within two weeks. However, even if it does rebuild, the cooperative has ruled out any production at the Takaka factory this dairy season. It says expanding capacity at its Brightwater plant is also an option.

Tuesday night's fire has devastated Takaka residents, and sparked fears Fonterra might not rebuild.

With the $80 million factory Takaka's largest employer -- generating $4 million in wages annually -- the town's residents are anxiously waiting and hoping that Fonterra will resurrect the plant.

Although Fonterra officials would not say how much money the factory made, reports suggest it generated more than $100 million in revenue.

Fonterra Clandeboye Hub operations manager Alan Bennett, who is responsible for six of the seven Fonterra South Island sites, said today Fonterra expected to make a decision in one to two weeks on the future of the factory, which was insured.

First, officials and insurance assessors needed to get inside the factory and find out the full extent of damage. Because of the safety risk, yesterday they were only able to walk around the outside of the building and look in, Mr Bennett said.

However, some key areas of the building have been saved by firefighters, who spent five hours battling the blaze. The butter room, boiler house, administration block and a coolstore were among the areas believed to still be intact.

One blow was that the casein area, which made high value specialised protein products which were exported to the European Union, Japan and North America, was destroyed in the fire.

More than 500 tonnes of pre-ordered protein, worth millions of dollars, was destroyed, Mr Bennett said. Conscious of the environmental risk from runoff after the fire, the dry stock was to be disposed of at the Eves Valley landfill today, he said.

Mr Bennett said Fonterra believed the fire started near the casein plant, although the cause was not yet known.

The dairy factory was closed for the off season when the fire broke out, with only a few staff and maintenance contractors on site at the time.

Mr Bennett said the Takaka factory would not have any processing capacity this dairy season, which runs from August to May. The factory processes five to seven per cent of the South Island's milk and at the height of the season processes more than one million litres daily.

Fonterra would continue to collect milk that would have gone to the Takaka factory though, and it was likely it would go to its Brightwater and Kaikoura plants, which each have a daily capacity of 200,000 litres.

The flow over would go to the large Clandeboye factory in Temuka, near Timaru, which had a daily capacity of 12 million litres. Trucking the milk there would be a huge and costly logistical exercise -- with a 12 hour turn around for tankers -- and could not be a long term solution, Mr Bennett said.

Although no plans had been made yet, one option Fonterra could explore for the future was expanding the capacity at its Brightwater plant, which processed milk powder, Mr Bennett said.

He said Fonterra had met with staff from its Takaka factory, and they would continue to be paid while the company decided on the site's future.

Staff and the Takaka community had been supportive, he said, and some staff were helping with security on the site, because it was still unsafe for people walk around.

Takaka fire chief Phillip Woolf said that while a cause had not yet been determined, there was "no reason to speculate that it was suspicious".

Golden Bay farmer Tony Reilly, who was chairman of Tasman Milk Products and then a director of Kiwi Cooperative Dairies before Fonterra was formed, said he, like most in the Golden Bay community, hoped the factory would be rebuilt.

Mr Reilly, a Fonterra shareholder, said until the full extent of damage was known, it was too soon to say if it would make good business sense to rebuild the factory. However, improving the chances of a rebuild was the fact that firefighters had saved a lot of parts of the factory, and the site already had crucial consents for things like discharging into the air.

"That goes some way to making it look a better option to rebuild," Mr Reilly said.

The fire was a major blow to Golden Bay, he said, as many families had a strong link with the factory.

"To see the site like it is today would be devastating for them, and it is," Mr Reilly said.

"We are keen to see the jobs preserved in Golden Bay.

"I'd certainly like to see Fonterra rebuild, but they'll have to do the number crunching first."

Meanwhile, 70 delegates at the NZ Dairy Workers Union (NZDWU) Congress passed a resolution urging Fonterra to rebuild the Takaka factory in the interests of workers and the community.

"We are aware that Fonterra is a global community but it must remember the communities that foster and nourish the company and how important it is to places like Golden Bay where it is the major industry," NZDWU national secretary James Ritchie said.

"Fonterra's CEO Andrew Ferrier will be addressing our congress this afternoon and we will be asking him to pass on to the board our message that we hope they will rebuild the Takaka factory," he said.

This was in the interests of the union's 70 members, the 100 staff in total at the factory and their families who depended on their income, he said.

- nzpa