US space innovator LeoLabs is to set up shop in Central Otago, establishing a phased-array radar to track small satellites and space debris - the first in the Southern Hemisphere.

LeoLabs credits its decision to invest in New Zealand in part to the support it received through the Government's Innovative Partnerships programme.

Research, Science and Innovation Minister Megan Woods says there is increasing small satellite traffic in space and, while this presented exciting new opportunities, it needed to be managed responsibly.

"LeoLabs' pioneering technology provides high resolution mapping data and services to mitigate the risks of collisions that could potentially create thousands of new particles of space debris and damage expensive equipment."

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Woods said the Government was committed to developing New Zealand as "a hub for high-value, knowledge intensive businesses that create value through innovation and R&D (research and development)".

LeoLabs would be "hugely beneficial" to New Zealand's emerging space industry, the minister said.

"It is part of a wider plan within the Innovative Partnerships programme to build a thriving innovation ecosystem attracting R&D particularly in new space, advanced aviation technologies and future foods."

LeoLabs and the Ministry of Business, Innovation and Employment, which leads the Innovative Partnerships programme and houses the New Zealand Space Agency, have signed a Memorandum of Understanding.

The MOU commits to work together to grow New Zealand's space industry and capabilities in space-related R&D, and to support LeoLabs in making connections within New Zealand's space ecosystem.

A spokesperson for LeoLabs said they were not identifying the site for the radar facility yet, but had lodged a consent application for it with the Central Otago District Council.