Fonterra's Edendale site, which will undergo major
expansion. Photo by Peter McIntosh.
Fonterra will spend about $157 million installing three
new plants at its Edendale site as part of a more than
half-billion-dollar upgrade of processing capacity.
The upgrade, which includes a $400 million drier at the
Lichfield site in south Waikato, was part of a trio of
significant announcements by the dairy giant yesterday.
Fonterra is also forming a global partnership with Chinese
infant food manufacturer Beingmate to help meet China's
growing demand for infant formula.
Chief executive Theo Spierings described the partnership as a
''game changer'' that would provide a direct line into a
market that was the ''biggest growth story in paediatric
nutrition in the world''.
That market was worth about $NZ18 billion and was expected to
be worth $33 billion by 2017.
Fonterra would soon start the process to issue a partial
tender offer to gain up to a 20% stake in Beingmate.
Its investment in the partnership would be $615 million.
After gaining regulatory approvals, the two companies would
set up a joint venture to purchase Fonterra's Darnum plant in
Victoria, Australia, and establish distribution to sell
Fonterra's Anmum brand in China.
China was Fonterra's ''number one market''and it wanted to be
part of the growth in China, Mr Spierings told a media
conference, via link from Beijing.
Beingmate ''was a very, very strong'' Chinese infant
nutrition player, with 7000 employees and big factories ''all
across the country''.
Meanwhile, Fonterra's investment in New Zealand would not
only expand its processing capacity but allow for more
flexibility to better optimise production, Mr Spierings said.
Last year, the co-operative encountered what it described as
an ''extraordinary situation'', with the disparity between
very high milk powder prices, and those for cheese and
The co-operative devoted the maximum possible volume of milk
to whole milk and skim milk powder streams, but was limited
by its production facilities, and the remaining milk was
converted to cheese and casein, which were generating lower
''Our strategy is to increase earnings by driving more milk
volume into higher value categories globally by turning the
wheel from commodities to higher-margin products,'' Mr
At Edendale, the three new plants comprise a milk protein
concentrate plant, which will separate protein from skim milk
and turn it into protein powder; a reverse osmosis plant that
will increase capacity on an existing drier by 300,000 litres
a day; and an anhydrous milk fat plant capable of processing
550,000 litres of milk into cream per day.
The development, once completed, will create 25 more roles at
the site, which is Fonterra's oldest operating manufacturing
The new drier at Lichfield, a $400 million investment, will
be capable of processing up to 4.4 million litres a day and
it will mean an additional 50 full-time jobs.
Chairman John Wilson said the investment was about giving
more flexibility to be able to maximise the value from
Fonterra farmers' milk.
Coupled with a $235 million development under way at its
Pahiatua site to develop a third drier, and investment over
the last six months in the existing asset footprint, it meant
about 10% more capacity across the peak, Mr Wilson said.