A new infant milk formula blending and canning company will begin operating in Canterbury next year with an injection of Chinese investment.
West Coast dairy co-operative Westland Milk Products has signed a joint venture agreement with Chinese milk formula company Ausnutria to create the new company called Pure Nutrition Limited with the facilities to be built at Rolleston.
Westland chairman Matt O’Regan said Pure Nutrition would be formed through an initial investment by Ausnutria of $4.5million, and a transfer of Westland owned land at its Rolleston site with a value of $3m.
Ownership will be 60 per cent Ausnutria and 40 per cent Westland Milk Products. Ausnutria will loan Pure Nutrition NZ$32m to build and run the plant.
The plant’s initial capacity is expected to be about 20 million cans of milk formula a year, or 15,000 tonnes.
Liquid milk from Westland’s suppliers will be dried at the company’s drying plant in Hokitika, then freighted by road and rail to Rolleston where the powder will be blended with nutritional supplements and canned. It will be exported to China via the port of Lyttelton.
Westland chief executive Toni Brendish said the joint venture meets the company’s strategy for growth around nutritional products and reinforces a strong relationship with one of the company’s key customers.
“Pure Nutrition will effectively be a substantial new customer for Westland Milk Products,” she said.
“In addition to the direct sales to Ausnutria in China, which will continue, Westland will be Pure Nutritions’ sole New Zealand supplier of dairy based powders. There will be an increase in the volume of base powders produced by Westland. The agreement commits Pure Nutrition to purchase minimum volumes of 3000 tonnes in its first year and 5000t per year thereafter.”
Brendish said Pure Nutrition’s earnings were expected to provide dividends to both partners after a five-year establishment phase during which profits would be re-invested into the business. There was also provision within the agreement for Westland to use the facility to produce canned products for its own customers.
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Brendish said Westland was confident that Pure Nutrition’s dividends over the period of investment would contribute to the payout Westland made to its shareholders.
“Ausnutria has experienced 34 per cent growth year-on-year to the end of 2015 with their own brands,” she said. “It has clearly demonstrated its ability to be a strong and growing player in a very competitive market.”
In a statement to the Hong Kong stock exchange Ausnutria Chairman Yan Weibin said the directors believed the joint venture would benefit both parties on a local and international scale.
By: Pat Deavoll
Source: Stuff.co.nz
