Dredging Sydney Harbour will open it to bigger vessels, and possibly the construction of a container terminal. ((CBC))

The Sydney Ports Corporation has signed a contract with a Dutch company, Boskalis, to do dredging work to the Sydney harbour.

Port officials say a deeper harbour will be able to accommodate bigger vessels, and could lead to construction of a container terminal.

It is estimated additional cargo ship traffic will generate thousands of new jobs over the short and long term.

"When the world economy picks up and the bigger ships get into the container ports, we will be ready.  In the meantime, any other business that comes along, the opening of the channel will facilitate bigger and more loaded ships," said Curdis Karrel for the Ports Corporation.

It took a couple of years to convince the various levels of government to fund the project at a price of about $38 million.

Karrel said some of the onshore work would get underway very soon.

"There's some development work to be done over at the Sydport site, on the land end of it. We need to prepare the land for the receiving of the dredged material, and there are still some details to be worked out with Boskalis,  so that when they arrive in the fall, everything will be ready."

Karrel said the dredging will  take six to eight weeks.