Dozens of jobs could be at risk at one of South Australia's major paper mills after its new owner announced plans for a significant transformation of the Millicent mill in the state's South East.

The 66-year-old mill is operated by Arbex, which took control of the site through a new joint venture in July. The company has now proposed what it describes as a transformation project designed to improve the long-term sustainability of the operation.

The proposal has raised concerns among workers and the local community because of the potential impact on employment. The mill is an important employer in Millicent and has operated in the regional community for decades.

Arbex managing director David Taylor did not comment on the precise number of positions that could be affected. In a statement, however, the company said it remained committed to its employees and the Millicent community.

The company says changes are being considered as part of efforts to maintain the mill's future viability. The proposal comes as manufacturing businesses across regional Australia face pressure from operating costs, changing markets and the need to invest in modern production systems.

For Millicent, the mill has significance beyond its direct workforce. Jobs at the site support families and contribute to surrounding businesses and services, meaning any substantial reduction in employment could have broader economic effects across the region.

The proposed transformation is still developing, and the final impact on employees has not been confirmed. Further consultation and planning are expected as the company works through the proposed changes.

The South Australian government's response and any potential assistance for affected workers or the wider community could also become an important part of the next stage of the process.

Local residents are watching the situation closely because the mill has been part of Millicent's industrial identity for more than six decades. Its future is closely connected to the regional economy and employment opportunities available in the South East.

The latest announcement does not mean that all potentially affected positions will necessarily be lost. The company has not released a final workforce reduction figure, and details of the transformation project remain subject to further development.

The situation is therefore expected to remain a major local issue as workers, unions, government representatives and the company consider the future of the Millicent operation.