Producers behind The Hobbit movie have decided to keep the project in New Zealand following two days of talks with the country's politicians.
All three Lord of the Rings films were shot there and the upcoming prequel was due to follow, but a dispute with union officials threw the production into jeopardy after they instigated a boycott over local performers' rights.
Bosses vowed to find another location for The Hobbit shoot and refused to back down even after the industrial action was halted, claiming the fall out had soured relations with the unions.
Executives from the studios behind the two-part blockbuster, Warner Bros and New Line, flew into New Zealand this week (beg25Oct10) for talks with politicians, who were determined to keep the production in the country.
And after two days of meetings, Prime Minister John Key has confirmed The Hobbit will be shot in New Zealand after all.
He says, "I am delighted we have achieved this result. Making the two Hobbit movies here will not only safeguard work for thousands of New Zealanders, but it will also follow the success of the Lord Of The Rings trilogy in once again promoting New Zealand on the world stage."
As part of the deal, the government offered movie bosses a tax break and promised to introduce new legislation to distinguish between employees and independent contractors working in the film production business.
Key adds, "We will be moving to ensure that New Zealand law in this area is settled to give film producers like Warner Bros the confidence they need to produce their movies in this country. It's good to have the uncertainty over, and to have everyone now full steam ahead on this project."
The announcement comes after a series of demonstrations across the country which saw supporters take to the streets to voice their support for The Hobbit and its New Zealand location.
The film, starring Martin Freeman, is set to begin shooting in February (11).