The first flour mill to be built in 75 years in Ontario will be located on Hamilton port lands.

P&H Milling Group will spend $40 million on the facility, and is getting $5 million toward the project from the Ontario government.

The company and provincial agriculture minister announced the new project and investments on Pier 10 Monday morning.

Mayor Fred Eisenberger called the investment part of a growing Hamilton "food cluster."

"Our commercial industrial tax base needs these kinds of investments," Eisenberger said.

Agricultural cargo made up 20 per cent of the port's cargo tonnage in 2014, up from 9 per cent in 2008. And the agri-food sector in Hamilton generates more than $1.5 billion in economic activity annually, according to Hamilton Port Authority stats.

"As we look at the other investments that the province is making, like light-rail transit which is going to move more people and create renewal in our city," Eisenberger said, "we also need to have that commercial industrial capacity grow to help ensure that our tax base is more healthy and more balanced going into the future, so not so reliant on the residential tax base."

City economic staff at the announcement could not immediately provide numbers showing how much tax is expected to come from the project.

Hamilton's Pier 10 will be the site of a new flour mill, the company announced Monday. (Kelly Bennett/CBC) The company is a division of Parrish and Heimbecker Limited, which built distinctive grain terminals on Hamilton Port Authority lands after it signed a long-term lease on Pier 10 in 2010.

The mill will create 16 new jobs and result in 200 jobs being "retained" in Ontario, said Jeff Leal, minister of agriculture, food and rural affairs.

Leal said the two crucial public policy issues of the 21st Century will be food security and fresh water, and investing in agri-food ventures like this one will help position Ontario to be a major player.

"Hamilton is a prime location for a flour mill," said Derek Jamieson, president and COO of P&H Milling Group. Jamieson said the Hamilton mill uses technology to cut down on the lead time for processing grain into flour for sale.

Jamieson said the project is anticipated to be built and ready to start production in late 2016.