Dairy giant Fonterra has been granted resource consent to begin transforming the former Fisher & Paykel factory west of Dunedin into a storage plant.
Fonterra will spend between $40 million and $45m on the North Taieri site and work is expected to be completed by August next year, the OtagoDaily Times reported.
The site will include a rail system capable of transporting 90 per cent of the milk powder and cheese stored at the site.
Milk powder from Fonterra's Edendale plant will be railed to North Taieri, while milk powder and cheese from the company's Stirling factory will also be taken by train from North Taieri to Port Chalmers for export.
The company plans to expand the facility again after 2014.
Obtaining resource consent was "quite an exciting opportunity", Fonterra warehousing transformation manager Greg Pope said.
It meant Fonterra could move from road transportation to rail and lower its carbon footprint, he said.
Mr Pope said conversion of the factory into a dry-storage area was already under way and the first product should be received there in October.
Fonterra bought the former Fisher & Paykel dishwasher manufacturing plant in December for about $20m saying it intended to invest heavily in rail infrastructure.
The factory is in an industrial zone and the Dunedin City Council granted consent without a public hearing.
Council resource consents manager Alan Worthington said the site was already zoned industrial and had existing rail-head facilities.
The effects on the environment of the proposed developments were considered to be no more than minor.
