Oceania has a small onsite laboratory for testing but expects to commence construction of a far larger laboratory to support the operation by mid-2018, he said.
The lab will let it carry out all in-process quality checks and the vast majority of the final product grading or testing and is partly in response to increased quality oversight from China, said Usmar.
"Clearly, the standards from China are very high and in actual fact are exceptionally high and are getting higher. They are certainly not getting any easier, so it's that," he said.
An onsite laboratory also gives the company total control of the value chain, including testing, "so that's an important component," he added.
Total investment including the lab and the third stage of development - will be "certainly be a minimum of $600m and possibly north of $600m," he said.
Oceania Dairy currently has 73 suppliers, all within a 50-kilometer radius of the facility. It is a "very tight collection base, which gives us some great efficiencies around our milk collection costs, which are exceptionally low," he said.
According to Usmar, there is a "healthy interest" from other farmers keen to supply Oceania. With another dryer the company will be looking to potentially double or even triple the milk intake and "we have a very healthy level of interest from other suppliers in other companies who have signalled that when we have a need they will be very keen to supply us," he said.
In terms of payment to suppliers, Usmar said Oceania offers a premium over and above what Fonterra Cooperative Group pays but he would not specify an amount. Fonterra is expecting to pay its farmers $6.75 per kilogram of milk solids in the current season.
Oceania reported a $6.8m loss in calendar 2016, from a loss of $16.3m in 2015 as revenues rose to $164m from $141m in the prior year, according to financial statements lodged with the Companies Office.
It employs 225-to-230 people, up from 95 two-and-a-half years ago. "We are seen as a bit of an asset on the ground," he said, adding that Yili has made a concerted effort to develop talent and ensure a positive relationship with stakeholders.
Usmar said he was not in a position to comment on Yili's interest in Australia's Murray Goulburn, which is holding its annual meeting on Friday.
In September, Yili said it had submitted "a cautious non-binding strategic development proposal" to the unprofitable dairy cooperative.
According to the Australian newspaper, other suitors include China Mengniu Dairy, Canada's Saputo, Parmalat, Bega, Fonterra and Arla Foods.
Yili acquired the fledgeling Oceania in 2012 after the previous owners failed to raise enough funds to create their own dairy factory, gaining access to 38 hectares of land at Glenavy with existing resource consents for the plant.
Most of the output is shipped to Shanghai Stock Exchange-listed Yili's factories and supply chain in China, where it is the nation's biggest dairy company.
