The New Zealand forestry unit of Japan's Oji Group plans to invest $23 million to consolidate and expand capacity at its sawmilling and drying facilities in Otago.

Oji's Pan Pac Forest Products unit bought the sawmilling and drying assets at Milburn and Milton in Otago in November 2014 when previous owner Southern Cross Forest Products was placed in receivership.

The company plans to consolidate operations at the Milburn site, which will be redeveloped, it said. Work will start next month and is slated for completion in April 2017.

"We'll continue to operate from both Milton and Milburn during construction, but the aim is a new, single-site, state-of-the-art production facility that will double existing capacity," said Pan Pac Forest Products (Otago) general manager Michael Reaburn.


The two plants currently produce 50,000 cubic metres of radiata pine lumber from Otago and Southland a year. When the expansion is completed, Milburn will produce 100,000cu m, with site capacity for further expansion, he said. About 85 per cent of the product is exported through Dunedin's Port Chalmers.

The Milton operations will be closed once Milburn is upgraded and operators will transfer to the expanded facility, with total staff numbers expected to increase to 35 from 29 currently across both sites.

Pan Pac was established 43 years ago with a sawmill and pulp mill at Whirinaki, north of Napier, and owns 35,000ha of forests.

Otago marks the company's first expansion outside of Hawke's Bay, where it employs 370 staff and 450 contractors.

The company has annual turnover of more than $350 million and exports to China, Japan and the US.