Fonterra's marking its territory in the South Island, with plans to expand its Studholme facility.

The dairy giant wants to spend just under $800 million on two high-efficiency milk powder driers.

It's looking to lodge a consent application with the Waimate District Council to build two new milk powder dryers on the Studholme site, near Timaru.

While the project will take about 10 years to complete, it's expected to bring around 250 jobs to the area.

Robert Spurway says they don't have a final budget yet but it will be similar to their other plants.

"These plants are similar in size to what we've built at Darfield and at Lichfield and a budget to the project at Lichfield is just under $400 million in today's terms."

Fonterra will meet with community members next week about the planned extension.

KPMG agribusiness expert Brent Love told Newstalk ZB's Rachel Smalley that South Canterbury is prime for dairying.

He says this move fortifies Fonterra against competition from the nearby Chinese-owned Yili factory, which opened last season.

"They're looking to combat competition, take opportunities for potential expansion in the local dairy industry and showing a positive attitude to the longevity of the fairy industry."

Love says South Canterbury and North Otago is one of the faster growing areas of the New Zealand dairy industry.

"It's supported by sustainable irrigation, good dairy land and the possibility of further expansion of that land."

Global operations managing director Robert Spurway says it's an important economic opportunity for the community.

"Each stage would create up to 125 full-time jobs based at the site and of course construction of these sorts of plants creates jobs for several hundred people during construction phase."

Robert Spurway says they'll be meeting with locals next week to discuss the plans.