The proposed expansion was planned to strengthen the company’s milk processing in South Canterbury and would play an important role in delivering the co-operative’s growth strategy, Fonterra managing director global operations Robert Spurway said.
Fonterra is planning to build two new high-efficiency milk powder driers at the Studholme site.
While no cost had been divulged at this stage, it was likely to be a $600 million project based on current costs for single drier developments.
The proposed investment would bring a significant boost to milk processing in South Canterbury, one of New Zealand’s fastest growing dairy regions, with around nine million litres of additional capacity to help keep pace with rising milk volumes.
“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,” Spurway said.
Until resource consent was granted the expansion remained a proposal, he said.
“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, because of its location, was the ideal option for the proposed development, Spurway said.
If approved, the expansion would take a phased approach, with construction beginning on the first drier within the next five years, followed by the potential installation of a second drier within the next 10 years.
“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.”
Robert Spurway
Fonterra
Mitigating environmental impacts was a high priority for the build, with plans including a range of wastewater treatment options with particular care given to the nearby Wainono lagoon.
Fonterra was also planning to minimise coal use and was investigating options for energy-efficient boilers capable of burning biomass.
The completed factory would require two extra trains daily to take product north to Timaru’s port and another, probably from the south, supplying coal.
The plant expansion would require an upgrade to the State Highway 1 intersection, adding lanes for trucks to turn into the factory.
Roading works would also require the removal of two rises on the state highway north and south of the factory’s crossroads turnoff.
Spurway said the upgrade would bring an injection into the local economy and was an exciting prospect for those living in and around Studholme and Waimate.
“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,” Spurway said.
