The bushfire recovery aid means the firm will spend $5.98 million to bolster the processing of logs.

Hyne chief executive Jon Kleinschmidt said without taxpayer money the investment would not have been possible.

"It is great to be able to deliver some positive news to our team members, our customers and the community. Hyne is committed to the Tumbarumba community, the surrounding region and the long-term viability of the mill," Mr Kleinschmidt said.

The investment follows the timber supply being hard hit by last summer's forest blazes,

"The bushfires have impacted 40 per cent of our log feed stock so it is critical we optimise the mill to improve efficiencies, keep people in jobs and keep up the supply," Mr Kleinschmidt said.

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"As part of the optimisation program of works, we will be recruiting a dedicated program manager and as always, we are committed to engaging local trades such as electrical and plumbing services, ensuring maximum flow on benefits to our bushfire-impacted community."

Member for Albury Justin Clancy said the spending by his government would have a multiplier effect through Tumbarumba.

"Supporting the viability of the mill is important for our Tumbarumba community," Mr Clancy said.

"Hyne is a significant contributor to the area, with economic benefits flowing to local tourism and other industries as well as the community organisations backed by Hyne, such as the Tumbarumba Men's Shed and the Batlow Apple Festival."

Deputy Premier John Barilaro said the grants program was aimed at supporting businesses retain and create jobs.