Authorities are investigating the discovery of 165 kilograms of illicit drugs allegedly found in a shipping container owned by dairy company Fonterra.
The container was supposed to be transporting powdered milk when it was seized in Algeria following the discovery of the drugs.
At this stage it is unclear whether it was heroin, cocaine or both, inside the container.
The haul is one of the largest ever intercepted in the North African country, a security official told AAP, while a spokeswoman for New Zealand Customs confirmed they were investigating the matter.
"Customs is aware of Algerian media reports that a significant quantity of an illegal drug – either cocaine or heroin – has been found in a shipment of milk powder in Algeria. Customs has not been able to verify these reports, and is working closely with Fonterra to establish the facts.''
According to New Zealand Customs' Group Manager Trade and Marine, Paul Campbell, there is no evidence the illegal substances were inside the container when it left New Zealand.
"Fonterra is a trusted trader and is part of Customs' Secure Export Scheme,” he said.
“Containers are sealed when they are packed, and the seal assures that the container has not been breached until it is loaded onto a ship."
The cargo was unloaded and reloaded in Panama and Valencia, Spain.
"We have engaged our attache in Brussels and he will be working to establish the facts," Paul Campbell said.
"Customs has very high confidence in the integrity of New Zealand exports."
A spokesman for Fonterra said they were aware of the reported finding.
"We're waiting to hear which Algerian authority is leading the investigation and we're on standby to provide any information as required.''