Protesters have chained themselves to a gate to prevent coal being delivered to Fonterra's Clandeboye dairy factory in South Canterbury.
The protesters - members of the Coal Action Network Aotearoa (CANA) - comprising three grandmothers, a student and a farmer - chained themselves to the gate at the factory's coal plant. In all, 24 people are now at the site taking part in the protest, the group said.
"Fonterra is our second largest user of coal and this factory burns 180,000 tonnes of coal a year," Can's Jeanette said Fitzsimons said in a statement.
"All of this ends up in our atmosphere, contributing to climate change. It's time for Fonterra to keep the coal in the hole and switch to woodchips instead," she said.
"Fonterra's coal use is also propping up the mining industry - coal mines around the country are being re-opened and extended because of Fonterra's addiction to coal," she said.
A Fonterra spokesperson said the co-operative was committed to reducing environmental impact of its operations through the use of new technologies and more efficient forms of energy.
"We measure our performance based on energy intensity per tonne of product, and set the standard within the New Zealand dairy sector based on this metric," the spokesperson said.
"Like the Coal Action Network, we are conscious of the impacts that all industries have on emissions and stand behind our commitment to reduce our footprint so that dairy can continue to play an important role in New Zealand's prosperity," the spokesperson said.
"As a responsible corporate citizen, we too believe a transition away from coal will be the only sustainable future for dairy production," the spokesperson said.
The protest follows a similar demonstration outside Fonterra's head office in Auckland in December.
Fonterra uses the intense heat generated by coal and gas for a network of driers which take the water out of milk in order to turn it into milk powder.
The co-op's chief operating officer global operations, Robert Spurway, said three out of the co-op's 17 North Island plants still use coal.
Click above to listen to Jim Hopkins talk about the protests on The Country.
The South Island plants, which don't have the benefit of pipeline gas - use coal.
"We are New Zealand's largest business and conversion of milk into dairy product is an energy intensive business," he said. "Our focus has traditionally been on making that as energy efficient as we possibly can," Spurway told the Herald at the time.
Spurway said their had been a 16 per cent reduction in Fonterra's energy intensity - equivalent to energy demand of Wellington - over the last 12 years.
"We are proud of that but we are actively looking at solutions to further reduce energy and to move away from coal," he said.
Fonterra said it buys only low sulphur coal and has installed emission control systems at most of its plants.