Chinese to invest more in dairy

Chinese investment in the New Zealand dairy industry is set to increase, providing approval is given by the New Zealand Overseas Investment Office and Chinese regulatory authorities for the investment of $214 million in a new plant to manufacture infant milk powder which will be built at Glenavy.

The latest Chinese investment follows the acquisition last year by Shanghai Pengxin of the Crafar farms in the North Island and Chinese dairy giant Bright Day's investment in Synlait at Dunsandel.

This foray into the New Zealand dairy industry comes from the Inner Mongolia Yili Industrial Group.

Yili is considered China's biggest dairy company.

Under the deal, the Chinese company will acquire Oceania Dairy's land consents to build a plant on 38 hectares in South Canterbury.

The Oceania Dairy Group directors/shareholders include former National Party leader and Reserve Bank Governor Don Brash and managing director Paul Park of Christchurch.

Mr Park said the sale and purchase agreement for the land was in place and the plant should be completed by June 2014.

"The annual production aim of 47,000 tonnes of infant milk powder should be reached in the 2016/2017 year," Mr Park said.

"Construction infrastructure should bring a number of jobs into the area and local businesses will be used wherever possible.

"Once the plant is fully operational, about 100 people will be employed at the site."

The latest moves by Oceania Dairy follow an ill-fated effort to get the project under way when the company failed to raise capital of $74.5 million, largely as a result of the global financial crisis.

At that time, Oceania Dairy held milk supply contracts with local farms. These were subsequently sold to Synlait Milk.

Mr Park said Yili was now pursuing preliminary arrangements with local farmers to supply the plant and would also look at plans to draw on regulated supplies of milk from Fonterra.

The construction of a new operation at Glenavy is a second re-birth for a dairy-related operation in the area. Last year, Fonterra acquired the New Zealand Dairies' South Canterbury milk processing plant at Studholme, Waimate, from Russian-owner Nutritek.