Pan Pac earmarks $23m for investment in Otago sawmill

Pan Pac Forest Products (Otago) Limited is planning a significant investment and expansion of its sawmilling and drying facilities in Otago.

General Manager Michael Reaburn says the plan involves consolidating operations and roles at the Milburn site which will be substantially redeveloped.

"The plan involves building a new kiln and installing a new boiler at the Milburn mill. Construction will take just over a year and is due 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."

Mr Reaburn says 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 be producing 100,000 cubic meters, with site capacity for further expansion.

"About 85 per cent of the product is destined for the export market and we intend to ship the product out through Port Chalmers.

"Once Milburn’s been upgraded, the facility at Milton will be closed and operators will transfer to the expanded facility. We currently employ 29 people across both sites - that will increase to 35 once Milburn is up to speed."

Mr Reaburn says the aim is to use local contractors and suppliers wherever possible, with work due to start this February.

"We expect the kiln will be locally sourced however some specialist equipment will need to come from Europe and North America."

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

"The Otago operation is an important part of our growth plan and helping meet the expanding demand for lumber in the Asian market.

"It was the first investment Pan Pac made outside our base in Hawke’s Bay and this new investment reflects our ongoing confidence in the people, plant and region," says Mr Reaburn.