Government looks at developing hydrogen and bio-fuels in South Waikato

The feasibility study will explore the development of sustainable wood products, hydrogen and bio-fuels at the Kinleith Mill near Tokoroa. Photo / Nicola Topping

The Government will undertake a $2 million feasibility study to explore the development of hydrogen and bio-fuels at Tokoroa's Kinleith Mill.

Forestry Minister Stuart Nash says the partnership between the Government and Oji Fibre Solutions, which runs the mill, could also boost the development of sustainable wood products, create jobs and reduce emissions across the economy.

Nash says: "Throughout this study, we'll investigate how we can make high-value and sustainable bio-products from wood. This could create high-wage, highly-skilled jobs as well as unlocking regional economic opportunities and ultimately building a ... sustainable ... bio-economy."

Oji Fibre Solutions chief executive Jon Ryder says the study is great news for both the country and Oji.

"The study is a fantastic opportunity for New Zealand to look at how it can increase value from the wood we grow by making a mix of products, like solid wood, packaging, wood-based chemicals and bio-energy; it is also an opportunity for Oji to fully understand our choices for the site."

The announcement of the feasibility comes hot on the heels of South Waikato District Council's visit to Parliament in August where it sought long-term funding solutions for the district.

A spokesperson for Nash says: "The outcomes of the study will identify a mutually beneficial pathway to a potential ... investment case."

Forestry Minister Stuart Nash. Photo / Mark Mitchell

Ryder says the mill's location in the South Waikato was very important.

"The Kinleith area is a strategic location ... being a large brownfield site, close to the country's largest exotic plantation forests, other wood processing facilities and near crucial transport networks ... If New Zealand wants to meaningfully develop a bio-economy based on wood, the Kinleith location, must be at the centre."

Oji Fibre Solutions employs more than 500 people in the South Waikato. Although the operation at Kinleith Mill is one of the country's energy-intensive industries, it already uses more than 80 per cent renewable energy in form of wood-waste fuels and lignin.

Nash says the joint feasibility study was "the perfect opportunity" to think differently about New Zealand processes wood.

"[It] is ... [an] opportunity to tap into the bio-economy and harness the valuable by-products of wood fibre."

He says the forestry and wood processing sector had significant growth potential.

"Innovative ways of thinking like this study will help will help the sector decarbonise, support local job creation and drive the circular economy."

The study will be completed early next year and cost $2 million, of which the Ministry for Primary Industries will fund 50 per cent and Oji funding the remainder.

Oji Fibre Solutions is an international company that produces pulp, paper and packaging products. It was founded in 1873 in Japan and bought the New Zealand company Carter Holt Harvey in 2014.