August 27, 2014

Fonterra increases processing capacity to help meet global demand

Fonterra is planning to build a high-efficiency milk powder drier in the North Island and increase milk processing capacity in the South Island to help meet global demand for dairy products.

Fonterra's CEO Theo Spierings said the investment, totalling US$464 million, will not only grow the co-operative's processing capability but allow for more flexibility to better optimise production. "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," he said.

"By creating more options for our New Zealand operations we are better placed to be able to make the product mix that delivers the greatest returns to our farmers and meet the needs of our consumers and customers worldwide."

Approval by the board has been given to build a drier at the Lichfield site in South Waikato, capable of processing up to 4.4 million litres per day. The drier is similar in size to the world's largest drier at Darfield which produces up to 30 tonnes of Whole Milk Powder per hour.

Three plants will also be installed at the Edendale site in Southland: a Milk Protein Concentrate (MPC) plant which separates protein from skim milk and turns it into protein powder - capable of processing 1.1 million litres per day; a Reverse Osmosis (RO) plant which will increase capacity on an existing drier by 300,000 litres per day; an Anhydrous Milk Fat (AMF) plant capable of processing 550,000 litres of milk into cream per day.

Fonterra Managing Director of Global Operations Robert Spurway said the co-operative has invested more than US$1.5 billion to grow processing capacity since 2011.