Katanning, Kojonup and Mt Barker have been identified as sites with the potential to support a combined wool scouring and top-making plant in the Great Southern Region.
Such a plant would be important in adding value to Western Australian wool exports and would create an estimated 80 jobs.
These findings were included in a report released today by Small Business Minister Gordon Hill, which examined the feasibility of a combined scouring and top-making plant operating in rural WA.
Two other sites, Gnowangerup and Tambellup were also touted as possible sites, subject to confirmation of a secure water supply.
Entitled `Wool Processing in the Great Southern', the report was commissioned by the Great Southern Development Authority and compiled by consultants J J Skillecorn and Associates.
Mr Hill said Western Australia produced 23 per cent of Australia's greasy wool, but processed wool only to the scouring stage.
He said top-making was the next stage, where the cleaned, dried and combed wool was formed into long strands before it could be spun.
"However, all Australia's top-making facilities are located in the Eastern States," Mr Hill said.
"This is a great shame, because if we were able to combine scouring activities with top making, we would not only enhance the value of our wool exports but could create local employment."
The report recommends that an established international merchant wool processor be pursued to invest in such a plant, by relocating overseas processing facilities to country WA.
It states that relocating overseas capacity in this way would not present competition to existing scouring operations in the Fremantle area.
The consultants examined six Great Southern region sites on a pilot basis, to determine each one's suitability as a location for a future scour/top-making plant.
They found that the Great Southern region and other regional areas offered the advantage of having large areas of relatively inexpensive land available for disposal of scour effluent and waste, together with communities very supportive of new industry.
Mr Hill said in the past, the local wool industry had expressed varying views on the feasibility of undertaking top-making in Western Australia.
"However, this report should allay any concerns," he said.
"The consultants have identified no technical or other limitations preventing top-making in WA.
"In fact, they consider that it is an opportunity too good for rural WA to miss."