The dairy giant has applied for resource consent to build two new driers at the South Canterbury site. That would allow it to process an extra nine million litres of milk.
Fonterra said the move would help keep pace with rising milk volumes, as the region was one of New Zealand's fastest-growing dairying areas.
Global operations managing director Robert Spurway said the expansion would play an important part in delivering Fonterra's growth strategy.
''With the steady increase in milk production, a strong schedule of capital investment in processing and manufacturing will be key to delivering on our V3 strategy - driving value, volume and velocity.
''Should it go ahead, the investment at Studholme will bring much-needed processing capacity to the South Island as well as optionality to make the products that bring the greatest returns to our shareholders.''
The Studholme site was ideal for the proposed development because of its location, Mr Spurway said.
The expansion would occur in phases. Building would start on the first new drier within five years, followed by the second one within 10 years.
Environmental factors were a high priority, Fonterra said. Plans included a range of wastewater treatment options with a view to protecting the nearby Wainono Lagoon. It also wanted to minimise its use of coal by having biomass-fuelled boilers.
The local economy would benefit from the expansion project, Mr Spurway said.
''As with any build of this scale, local employment would be one of the major winners. With each new drier, our site and tanker staff would grow by around 125 new positions, with builders and contractors to complete the build factored in on top of that.
''Our teams are hard at work to complete our proposals for this potential development and will ensure that we share them with our neighbours and the wider community before they are finalised,'' he said.
BY SALLY BROOKER