A mining company's plan to repurpose the former Ivanhoe jail has been welcomed by the community, although a senior figure at the local council has some concerns.

The jail has been closed since June, with Tronox Australia looking to use the site as a housing base for workers employed at its Atlas Campaspe mine.

The mine is 175 kilometres south of the town and operations are expected to begin in 2022.

Local postmaster Ray Longfellow said he welcomed the company's plan and the potential workers and families that could move to the town.

"It's a win-win situation for the local school and health service as well."

Local resident Alan Carmichael said he was happy to hear the jail's buildings might be repurposed again.

He said more workers could see the local football team grow, alongside business and schooling.

If the company's plan came together, he said he would like to see if they could support a local truck show being planned for over the October long weekend.

"We did have a truck show in Ivanhoe in 2019 and they [Tronox] might sponsor us this year if they get it up and running.

'Decades of employment'

Tronox Australia managing director Annette Elliott said construction on a rail transfer site at Ivanhoe was planned for this year.

"The new rail site at Ivanhoe will be an important logistics hub for the Atlas Campaspe project, and repurposing the correctional facility is one option we're investigating to support the site," she said.

Ms Elliott said the company was planning to support Ivanhoe's economy and wanted locals involved in the project as well.

"We aim to run our operations in a way that benefits our host communities," she said.

"Taking the lease on the correctional centre is one option for us to do that.

"But we'll also be working with the town to explore other business and employment options."

Corrections Minister Anthony Roberts said there had been numerous proposals put to the government around repurposing the jail.

He said what underpinned the government's decision making was the local community, job numbers and the wealth and investment those submissions would create.

"There were other proposals that were put up, potentially state-subsidised enterprises, but the numbers weren't necessarily there and maybe they weren't the sort of jobs that Ivanhoe wanted or needed."

Shire concerns

Greg Hill, the general manager of Central Darling Shire Council, said he welcomed Tronox's plan.

But he said he was concerned that most of those involved in its construction would be fly-in fly-out or drive-in drive-out workers which would impact on their involvement with the community.

"These workers will work their week or two weeks on, then they'll disappear for a couple weeks on break and then they'll be back again."

Mr Hill said he was concerned about the long-term viability of the project as well.

"Correctional Services were there for 20, 25 years; before them it was the railways who were there for 50-odd years.

"We're talking about a mining company which is subject to commodity prices.