Regional Development Minister Shane Jones said the Southern Link Logistics Hub in Mosgiel would receive a loan of $8.2 million to upgrade the rail link to Port Chalmers.
The announcement comes in the same week Calder Stewart announced a rival project - a "$3 billion" inland port in South Otago.
Speaking at a regional growth summit in Dunedin, Mr Jones said the Mosgiel facility would address "long-standing issues with the freight network in Otago".
"By reducing heavy vehicle movements through Dunedin, the logistics hub will reduce traffic congestion and reduce travel time to and from the port for freight vehicles," he said.
Southern Link Property and KiwiRail Holdings would receive the loan to develop a three-track rail-siding connecting Port Chalmers to Mosgiel from the Regional Infrastructure Fund.
Port Otago and Dynes Transport have long touted plans for the 50ha Southern Link Logistics Park in Mosgiel.
Port Otago chief executive Kevin Winders said the Southern Link partnership had been negotiating with the government and Kiwirail for the past 18 months.
“The engagement has been very positive, as key stakeholders recognise that Southern Link delivers a critical piece of regional infrastructure – one that is needed to keep lower South Island exports flowing and the southern economy healthy.”
Dynes Group managing director Peter Dynes said Stage 1 of Southern Link – container storage and use of existing rail infrastructure on the Dukes Road site – was on track for an October opening.
Construction at Dukes Rd is expected to start next year.
Mr Winders said this week he had not been aware of the rival Calder Stewart plan.
Calder Stewart lower South Island business development manager John D’Arcy said its proposed South Otago freight centre could add $3 billion to the region’s economy.
If consenting went smoothly, ground-breaking was expected to take place in 24 months.
Then, in another 18 to 24 months the 55ha inland port would be operational, he said.
Mr D’Arcy said the Calder Stewart project progress regardless of whether the Mosgiel went ahead. - APL
