A cornerstone of New Zealand's non-carpet textile industry looks set to survive through a rescue operation by farmer-owned investment company Wool Equities and a consortium of knitting firms.
The companies have combined to buy the Quality Yarns wool spinning plant at Milton in South Otago and hope to have it running again by next month.
It had been making specialist knitting and weaving yarns in the town's historic woollen mill, but stopped processing late last year.
The company said it had been forced out of business by competition from imported yarns as the result of the trade agreement with China, along with compliance costs of the Emissions Trading Scheme, Resource Management Act and ACC.
Wool Equities chairman Cliff Heath says the company was approached by a group of knitters who bought yarn from the mill.
He says that approach has led to the deal to buy the plant and re-open it.
Mr Heath says the purchase of the plant equipment went unconditional last week, and the consortium aims to have other details finalised in the next couple of weeks.
He says the mill can spin virtually any type of yarn, and the yarns are critical to a number of knitters and spinners.
Mr Heath says if the mill had closed, those customers may not have been able to source other New Zealand yarn.
He says the consortium of new owners will be formalised this week.