Dark clouds clear as Southland prepares for bright economic future

Thursday, 14 January 2021

Potential new industries emerge as Southland prepares for its economic future.

There was a moment last year when Invercargill-raised economist Benje Patterson circled Southland as having the dimmest outlook of any region in New Zealand.

Patterson wasn’t alone in holding that view either.

However, the dark clouds, generated by the prospect of Rio Tinto’s aluminum smelter closure, are clearing.

Southland is preparing for a brighter economic future and its leaders have four years to help line everything up.

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Patterson said there’s a trend, increased on the back of Covid-19, where people want to live in regional New Zealand, for affordability and lifestyle reasons.

But it’s the emergence of a host of potential new industries in Southland which has fuelled the increased confidence in the region.

In December Meridian and Contact Energy announced it will spend $2 million on a feasibility study to investigate the potential of a large-scale renewable hydrogen production plant in Southland.

A few days later an audacious plan was then unveiled to build a huge cloud computer data centre in Makarewa in Southland, at a total cost of about US$500m ($700m).

This week it was revealed that the country's first plant-based milk factory will be built in Southland.

While aquaculture has also been identified as another potential growth industry.

In July Southland’s aquaculture industry received an $8m loan from the Government’s Provincial Growth Fund to develop a salmon hatchery in the deep south.

Patterson said Southland has been provided with some “breathing space” given Rio Tinto’s announcement that it would extend its Tiwai Point operations through to 2024.

Those four years provided more time for Southland to work through new industry opportunities.

Great South chief executive Graham Budd acknowledged the initial Tiwai announcement painted a gloomy picture.

But what the smelter announcement also did was bring other potential industries which Great South had already been working on for many years.

He said they were dealing with potential large-scale operations and that work often took years before results were seen.

He said there was plenty of confidence in Southland’s future.

Patterson said the key would be firming up a replacement industry, or industries, to tap into the power that would become available when Rio Tinto did eventually depart.

“We just don’t want something to be chosen because it’s the quickest and most convenient [idea] to fix a problem. We’ve now got that breathing space to make the best decision for the long-term,” Patterson said.

The world will always need to eat Patterson said, and that too was Southland’s friend.

“The trick for Southland is ensuring that our farming resources are put to their most productive use, in a way that is also environmentally sustainable because that is something that is affecting the way that we farm.”

Government policy wasn’t solely prompting change, but also consumer tastes and preferences globally, Patterson said.

Hence, the emergence of oat milk as a possible growth industry for Southland.

“The demand for plant-based milks are rising astronomically in comparison to animal-based milk products.”

“The great thing with [oat milk] it does take something that starts as a humble oat, but in an environment where Southland has some of the highest yields in the world, in terms of growing them.”