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Port Otago wants approval to deepen its shipping channel by 2m to 15m to allow for bigger ships.
The dredging will proceed if shipping lines confirm they will regularly bring larger vessels, so the port is seeking consent in case it needs it.
The port is consulting affected parties before it lodges a resource consent application.
Port Otago proposes dredging 7.2 million cubic metres of sand and silt and dumping it 6.5km off Taiaroa Head.
Port Chalmers Fishermen's Co-operative Society president Steve Little said the dump area where the dredged sand settled would become a "dead zone" for flat fish such as tarakihi, elephant fish and New Zealand sole.
Fishers would have to look further afield, or tie boats up at some times of the year.
People had little comprehension of how much material would be dredged, he said.
Mr Little feared the effects of the silt - which would constitute about a third of the material - were not properly understood.
A floating "plume" of silt could smother marine life, such as lobster larvae.
While the port's modelling indicated it would not drift north, damaging fishlife, Mr Little feared it would.
The co-operative, which has 40 active members, could consider seeking compensation, but it had to be discussed with members, he said.
Mr Little said he understood the port needed to develop, and secure its economic future.
However, the effects on "small players" had to be considered.
"I think the long-term effects, we are going to find, from this dumping have not been well researched."
He said the co-op's concerns were not just economic but environmental.
Southern Clams managing director Roger Belton said the project could harm bird and fish life, particularly on the sea floor.
"The ecological and environmental costs to the valuable and unique environmental resources that the city enjoys - and which it proudly markets - need to be weighed up against the projected benefits of a deeper port," he said.
Port Otago chief executive Geoff Plunket labelled Mr Belton's concerns "ridiculous and fanciful" and wondered whether he had read the report on the proposal.
The dredging would be the best researched and most environmentally sensitive carried out in Port Otago's history, during which time about 34 million cubic metres of material had been dredged since the 1870s.
Mr Plunket said Mr Little's concerns were valid, but the sand-covered area would be relatively small, while the hurdle for seeking compensation was high: fishers would need to demonstrate significant potential losses.
He accepted there would be effects: it would not be possible to dredge such a large volume without effects.
Mr Plunket said he was confident Niwa's modelling work had revealed the best place for the dump, with the fewest adverse effects.
Port Otago had planned to lodge the consent application in April, but had extended this to May or June to give more time to consult affected parties beforehand, Mr Plunket said.