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Filming has begun on the long-awaited Hobbit movies, ending years of delay due to funding problems and a labour dispute which nearly saw the project shifted out of New Zealand.
The two films are being directed by New Zealander Sir Peter Jackson, 49, who made the hit Oscar-winning Lord of the Rings trilogy.
The films are expected to pump around $1.5 billion into the New Zealand economy.
Friction between director Jackson and the New Zealand actors' union over pay and conditions delayed production last year, and Jackson's hospitalisation earlier this year pushed filming back again.
Filming will take place at Stone Street Studios in Wellington and at a number of locations around New Zealand, with the exact whereabouts a closely guarded secret.
Wellington actor Richard Whiteside, who petitioned last year against threatened union boycotts of The Hobbit, said finally getting the films underway sends an important message to filmmakers worldwide that New Zealand is open for business.
He said he hopes the project will encourage other international productions to make their films in New Zealand.
Whiteside said his colleagues in the Wellington film industry are thrilled to finally be working and bringing the pay cheques in after a difficult few years.
The first of the two movies will be released in December 2012 and the second is expected a year later.
The movies have been beset by a succession of problems, most notably the threat last year by Time Warner unit Warner Bros to move production overseas because of fears unions would impose a boycott to back demands for a collective contract.
The government last year changed labour laws to keep the estimated $500 million production and increased tax breaks for Warner Bros, citing the damage that might be done to the country's small film industry.
Before that, issues around the funding of the films saw original director Guillermo Del Toro quit in 2010.
The final challenge came from Jackson's hospitalisation earlier this year for emergency surgery for a perforated ulcer.
The Hobbit is based on the adventures of Bilbo Baggins, a hobbit who lives in the land of Middle-earth and goes on a quest to find treasure guarded by a dragon.
The book, first published in 1937, is the precursor to the "Lord of the Rings" trilogy, which also takes place in Middle-earth.
The cast for the movies includes Oscar winner Cate Blanchett, Ian McKellen, Orlando Bloom, Ken Stott and Martin Freeman as Bilbo Baggins.
Jackson's assistant Matt Dravitzki says everyone involved is now looking forward to some action.
- with Newstalk ZB
