Chinese company in funding New Zealand milk powder plant

WELLINGTON - A state-owned Chinese agricultural company has taken a cornerstone share in small New Zealand dairy firm Mataura Valley Milk to enable a major expansion, the dairy company said Thursday.

China Animal Husbandry Group (CAHG) will hold 71.8 percent of Mataura Valley in exchange for funding the construction of a nutritional powders manufacturing plant, valued at NZ$200 million ($142.06 million), near the South Island town of Gore.

The new plant, which would create at least 100 new jobs, was designed to tap into the growing global demand for nutritional powders, especially infant formula, Mataura Valley director Aaron Moody said in a statement.

"The global infant formula market was worth NZ$57 billion ($40.51 billion) in 2013, and the market in China alone is expected to reach NZ$38 billion ($27 billion) by 2017," said Moody.

"The appetite for nutritional powders is huge with China's imports of infant formula growing by 51 percent in the 12 months to February 2016. Importantly, the price for infant formula and growing up milk powders is less reliant on the global commodity dairy price."

The state-of-the-art pharmaceutical standard plant would produce infant formula, ultra-high temperature cream and small amounts of skim milk powder, using locally sourced raw milk for global markets.

"The relationship with China Animal Husbandry Group, provides us the confidence to proceed with the plant and excellent access to the rapidly growing demand in the Chinese market," Moody said.

Local dairy farmers, who would supply the plant, would hold 20 percent of the company, and another New Zealand dairy firm, BODCO would hold 5.6 percent, while the rest would be held by mostly New Zealand investors.

CAHG's investment in Mataura Valley had been approved by the New Zealand Overseas Investment Office as well as the Chinese government.

Construction of the plant is expected to start in October.