Environment Southland staff say they are "concerned" as flood water threatens an old paper mill storing chemicals which could turn toxic when mixed with water.

Thousands of tonnes of a potentially dangerous chemical — known as ouvea premix — are still stored in the former Carter Holt Harvey paper mill in Mataura.

The dross from the New Zealand Aluminium Smelters' (NZAS) Tiwai Point smelter is classified as a class 6 hazardous substance, which can generate poisonous ammonia gas if it comes into contact with water.

The Mataura River is in full flood through the centre of Gore. Photo / High Country Helicopters
The Mataura River is in full flood through the centre of Gore. Photo / High Country Helicopters

Emergency Management Southland said emergency services and others have carried out further flood protection works by sandbagging around the building.

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"However, with 2,660 cumecs of water expected at Mataura at 11.50am it is uncertain what impact this will have on the paper mill.

"Emergency Management Southland and other agencies have yet to determine what the environmental impact may be.

"Emergency Management Southland is coordinating with other relevant agencies, including iwi."

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An Environment Southland spokesman contacted this morning said an update on the situation would be released soon.

"We are just following up on that now ... we're concerned, but we're watching that."

Australian company Inalco Processing Ltd was last year awarded a contract to remove about 22,000 tonnes of the substance from the paper mill and other sites in Invercargill, but the work was expected to take six years.

In 2018, Gore District Council chief executive Steve Parry said Mataura had come close to environmental disaster during a flash flood earlier that year.

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The former Carter Holt Harvey paper mill where partially processed aluminium smelter dross is stored. Photo / ODT
The former Carter Holt Harvey paper mill where partially processed aluminium smelter dross is stored. Photo / ODT

The dross was previously owned by Taha Asia Pacific, which went into liquidation in 2016 and in March 2018 a $4 million package to remove the substance was brokered by the NZAS, the Government and Southland councils.

The contract ensured the 10,000 tonnes of premix stored near Mataura would be moved first, due to the "significant risks posed to both the environment and people by having the premix stored next to the Mataura River", Parry said at the time.