Fire crews are scrambling to contain a blaze enveloping a large pile of sawdust at a South Island chip mill.
The fire broke out at Southwood Export Chip Mill, on Kekeno Rd in Awarua shortly before 4pm.
Five helicopters and 12 engines were at the scene battling the blaze, along with four tankers and one command unit.
A statement from Fire and Emergency NZ said the fire was being fanned by strong winds and had spread from a pile of vegetation into dry grass on Kekeno Place.
Mill employee Yolly Vargas was at the scene, where she was watching smoke billowing out from the area around the fire.
"It's on a big pile of sawdust that's outside the building," she said.
Thick smoke was crossing the Invercargill Bluff Highway nearby, which was currently blocked to traffic.
Diversions were in place off State Highway 1 at Awarua, at Tiwai Rd, Awarua School Rd and Colyer Rd.
These diversions were not suitable for heavy vehicles.
Police were at the cordons and were urging motorists to avoid the area if possible.
Vargas said while the other employees had left the building she had stayed inside to co-ordinate with her boss, who was outside the country.
She did not believe there was any immediate danger to her spot inside the building.
Fire and Emergency NZ said rising winds and dry conditions had created an extreme fire risk across the region.
Fire crews and helicopters across the Southland and Otago area had been on standby in case of emergency.