A $300 million plan to build a wood pellet factory and a data centre on the site of a closed pulp mill in the Ruapehu District was unveiled last week, offering up to 100 new jobs to a community still recovering from the loss of about 230 positions two years ago.
The development, reported by RNZ, would put two very different industries on the old Winstone Pulp International site at Karioi: a renewable fuel plant run by Te Ara Hiko and a data storage campus run by Data Igloo. For a district of roughly 13,000 people that has watched its young workers leave for jobs abroad, the proposal has been greeted with cautious hope, alongside real questions about water, energy and who actually benefits.
What the Ruapehu development would involve
Te Ara Hiko's wood pellet facility would produce 180,000 tonnes of pellets each year for domestic and export customers, repurposing the existing wood-processing infrastructure and drawing on the region's forestry resources. Ruapehu District Mayor Weston Kirton said the project was similar to what the site did before and would provide what he called appropriate and sustainable energy, avoiding potentially the use of coal.
Data Igloo, meanwhile, plans a data centre on the same site offering secure, energy-efficient storage and processing. The company said there were sufficient resources for its planned operations, and that further details would be released after community engagement.
Creating local employment and training opportunities is an important part of our plans.
A community still carrying the weight of the mill closure
Winstone Pulp International permanently shut its two central North Island mills at Karioi and Tangiwai in 2024 after 45 years of operation, driven out by soaring wholesale electricity prices. The closure displaced about 230 workers in a community of around 13,000.
It was actually devastating, said local Airbnb host Andre Bezuidenhout. He told RNZ neighbours had to sell their homes and families moved out of the region to find work. He welcomed the new plan, saying it was just another business opening in the area, and thought the region's strong forestry base made it a natural fit for a pellet factory.
Carl Christensen, who owns Mountain Rocks Cafe & Bar, said anything that kept people employed and families in the area would be a positive. The mill's closure had been tough, with younger generations heading overseas for work, but he said the community was pretty resilient.
So it's going to be a huge win, you know, in the next short-term and then in the long-term.
He said dairy, forestry and agriculture had kept the region going, and local contractors were already gearing up to refit and redevelop the site.
The mayor rejects power supply fears as 'scaremongering'
Globally, the construction of large-scale data centres, especially those powering artificial intelligence, has drawn controversy over high water and energy use. Kirton dismissed suggestions that the Data Igloo project would strain the local grid, calling the idea scaremongering.
I think it's scaremongering to suggest that this business is going to take away power in any shape or form to local homes. It's just nonsense.
The mayor said the council and other agencies had worked hard with the site's owners to progress the developments responsibly, but acknowledged the community had struggled with unemployment and an over-reliance on seasonal work. Ruapehu relies predominantly on ski seasons and farming, he said, and its isolation means it misses out on things urban counterparts take for granted.
The debate is not unique to Ruapehu. Electricity supply requirements for data centres have become an election issue, with BusinessDesk reporting that some form of policy response is likely whichever party wins. Opinion writers have argued that bans based on short-term bottlenecks in the United States are misguided, and that the data centre opportunity could be embraced by places looking to attract operators hedging against American policy. Industry tracking also shows Data Igloo plans a campus at the closed Karioi pulp mill, part of a wider pattern of regional New Zealand courting data infrastructure, as noted by the NZ AI Infrastructure Index.
Ngāti Rangi: jobs, but not at the river's expense
Ngāti Rangi, the iwi whose rohe includes Mount Ruapehu, has backed quality employment opportunities while pressing for environmental safeguards. Helen Leahy, the iwi's pou ārahi, said its research found that half the people who lost their jobs two years ago had left Ruapehu or worked outside the region, and a third were still looking for work or employed only seasonally.
Our concern is that this shouldn't be at the detriment of the environment, which we all rely on.
The iwi is particularly concerned about the Whangaehu River, which flows from the crater lake of Mount Ruapehu. Leahy said the iwi had always opposed wastewater discharge and water take from that awa, and wants more information about the environmental impact of both projects before they proceed.
What happens next
Data Igloo said further details of the development would be made public after engaging with the community. For locals like Bezuidenhout and Christensen, the immediate question is simpler: whether the promise of 100 jobs becomes reality, and whether this time the region's recovery sticks.
FAQ
What is being built at the old Karioi pulp mill site?
A $300 million development combining a wood pellet factory producing 180,000 tonnes a year and a data centre, unveiled last week, with up to 100 new jobs expected.
Why did the original pulp mill close?
Winstone Pulp International permanently closed its Karioi and Tangiwai mills in 2024 after 45 years, citing soaring wholesale electricity prices. About 230 jobs were lost.
What concerns has Ngāti Rangi raised?
The iwi supports the jobs but opposes wastewater discharge and water take from the Whangaehu River, and wants more detail on the projects' environmental impact.