Midway to construct a $14 million wood chipping and export facility at Bell Bay.

The export and infrastructure project is part of a multi-year lease agreement with TasPort that will allow Midway to build and operate its own facility, injecting $5 million into the region's economy.

The project is a major expansion for the company who forecast exports to increase from 50,000 tonnes in 2020, to 250,000 in the second half of 2022 and peaking at 500,000 million tonnes in 2023.

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Midway chief executive Tony Price said the company would self-fund the expansion, investing up to $14 million of its own capital to build storage, processing and loading facilities at Bell Bay.

He said the construction of the port facility would take place over the next two years across three stages, including establishing a stockpile facility at berth seven by the end of 2021, the construction of the chipping facility by April 2022.

Mr Price said the third phase included doubling the facilities chipping capacity from 250,000 to 500,000 tonnes per year by adding a second wood chipper to the facility.

The wood chips are used in pulp and paper production. Mr Price said global demand was outstripping supply driven by a rise in demand for raw materials from producers like China.

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Primary Industries and Resources Minister Guy Barnett said he supported the expansion and the boost it would provide.

"We welcome more investment in our sustainably managed Tasmanian forestry sector through Midway wood fibre's expansion at Bell Ball, which is another sign of confidence in this vital industry," he said.

"While the sector is already worth some $1.2 billion to our economy annually, we want to see that grow."

Mr Price said the sustainability of the Bell Bay facility was based on a long-term timber supply contract with Sustainable Timber Tasmania and private forest owners.

"Sustainability is a fundamentally important part of what we are doing, we want to be here for a long time," he said.

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Blue Derby Wild, an organisation working to protect native forests in the North-East, said they would not oppose the expansion as long as it only utilised existing plantations.

Campaign coordinator Louise Morris said the organisation had always supported a well-run plantation industry in Tasmania,

"If we've already converted those areas to plantations, they should be run as a viable ecologically responsible crop," she said.

"Our main concern is whether or not this new wood chip facilities signal an expansion of native forest logging to convert native forests into more plantations, or if it is going to be utilising existing plantations," she said.

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