The Tiwai aluminium smelter will be paying the greatest share of a $4 million deal to clean up thousands of tonnes of hazardous waste.

Photo: Wikicommons

Under the deal the smelter and the government will pay three quarters of the cost, and the four Southland councils and four landowners will cover the rest.

Steve Parry - the chief executive of the Gore District Council, which brokered the deal - said this was a huge milestone, because the 10 parties all wanted the problem solved, but to pay as little as possible.

"I don't think any party involved is doing high-fives and somersaults, it's kind of a deal all the parties can live with, and can see light at the end of the tunnel," Mr Parry said.

It would take about two years to ship the material to Australia for disposal, Mr Parry confirmed.

Local councils in Southland, the government and the Tiwai aluminium smelter company have been negotiating since the end of last year on how to split the costs.

The liquidators of the waste processing company Taha walked away late last year from the job of cleaning up at least 22,000 tonnes of Ouvea premix which was stockpiled in Mataura and around Invercargill.

They said they could not get the funding.

Michael Laws has represented the landlords, including the old Mataura paper mill which has 10,000 one-tonne bags of the waste stored inside.

He confirmed the the waste will be sent through Tiwai smelter's new processor Inalco.

The landlords were delighted at the deal and the government getting involved, but felt bruised, Mr Laws said.

"Landlords are contributing money, but I have enormous sympathy for their plight."

They had been strung along by a series of individuals and the company Taha, and were now $1.2 million out of pocket, Mr Laws said.

Photo: RNZ / Rebekah Parsons-King

An earlier processor of Tiwai dross, Haysoms, went bust, leaving thousands of tonnes in Bluff.

"Everyone said no, never again. Well, it's happened again," Mr Laws said.

The smelter should not be let off the hook and the government and local government must work to stop this recurring, he said.

"They may well be a major economic player in Southland, but they have also been a polluter", he said.

The smelter company would not give an interview today and would not say how much it was contributing.

The government confirmed its share was coming from the Waste Minimisation Fund run by the Ministry for the Environment, though it would not say how much that was until the deal was confirmed.

The final deal is expected to be signed in the next couple of weeks.