News

Fonterra Australia to invest AU$165m in capacity expansion

30 Jan 2018

Fonterra Australia says it is matching its push to secure additional milk volumes with more than AU$165 million in capital expenditure in this financial year at key sites in Victoria and Tasmania.

Fonterra Australia says it is matching its push to secure additional milk volumes with more than AU$165 million in capital expenditure in this financial year at key sites in Victoria and Tasmania in a move to increase capacity and meet unique demand opportunities for dairy.

The investment was first signalled by the dairy co-operative’s CEO Theo Spierings in November last year. It is made up of new investment of around AU$130 million to put in 500 million litres of additional capacity, and a further AU$35 million for a range of annual site improvements as part of its regular capital investment plan in Australia.

The new expansion includes:

+ AU$125 million expansion at Fonterra Australia’s flagship Stanhope cheese facility in northern Victoria which will double the size of the cheese plant

+ AU$12 million investment in Tasmania, which includes expansion to its Wynyard cheese plant and an increase in lactose processing capacity at Spreyton

+ A further AU$7 million expansion at the Darnum nutritionals plant in Gippsland as well as the installation of two robotic palletisers in Bayswater in eastern Victoria to improve efficiency

+ AU$13.5 million for projects at Cobden and another AU$8.6 million at Dennington in western Victoria

René Dedoncker, Managing Director of Fonterra Australia, said customers want trusted supply options out of Australia, especially for products like cheese, whey and nutritional powders which are in high demand.

“We have a clear strategy that is delivering sustainable returns. To create value, we need to invest to stay ahead of the demand curve. These investments support our aim to secure positive returns back to our farmers on both sides of the Tasman.”

He said Fonterra Australia will play to its strengths in cheese, whey, nutritionals, and butter, increasing production capacity to meet rising domestic and global demand, but filling its expanded capacity would mean securing more supply.

Dedoncker said the Stanhope investment largely focuses on expanding the site’s cheese making capacity, and doubling the daily milk volumes it can process.

The investment will double the size of the cheese plant, increasing cheese production by a further 35,000 metric tonnes for a range of cheeses including cheddar and mozzarella. Stanhope can currently produce 45,000 metric tonnes of product including cheddar, mozzarella, gouda, parmesan, pecorino, romano and ricotta.

At Fonterra Australia’s largest site of Cobden, AU$13.5 million is earmarked for robotic palletisers and improvements to the butter plant that produces Australia’s leading butter brand of Western Star, while another AU$8.6 million is being invested at Dennington in a new 25kg packing line for nutritional powders and efficiency improvements.

The AU$9.7 million Wynyard investment will support an annual increase in cheddar cheese production by around 3,900 metric tonnes and increase the daily milk volumes processed from 1.3 million litres to 1.5 million.

At Darnum, the AU$7 million investment will support higher production of nutritional powders, whole and skim milk powders for the domestic and international export markets.

In total the capacity investments will create around 36 jobs, in addition to generating construction work during the development phase.

Dedoncker said more capacity needs more milk and Fonterra Australia is working hard to secure this.

“Our Australian milk pool has grown by 400 million litres this season, and with this new investment we plan to grow our milk further which we expect will come through growth from our existing farmers who wish to grow, coupled with milk from new suppliers joining Fonterra.”

Fonterra Australia’s total milk intake is now 2 billion litres in Victoria and Tasmania, with the company employing an additional 15 drivers after investing more than AU$8 million in 14 truck and trailer units across its milk collection regions in Victoria and Tasmania.