Key Points:

By Owen Hembry

Dairy giant Fonterra is setting up a charitable project to help pregnant Chinese women and mothers in response to the poisonous milk crisis that has left tens of thousands of infants ill and at least four dead.

Fonterra's 43 per cent-owned Chinese dairy company San Lu is one of 22 firms caught up in the scandal, in which the industrial chemical melamine was added to watered-down milk to boost protein levels.

Speaking from Beijing yesterday, chief executive Andrew Ferrier said: "We're obviously shocked by the degree of tragedy and we think that this is one way we can make a gesture that will help over the long-term in infants and maternal mother health."

Green Party co-leader Russel Norman said the move was positive.

"It is better that they are doing something, rather than nothing - it's something to help out. But it would have been better if they had paid more attention to San Lu in the first place."

The move drew praise from New Zealand China Trade Association chairman Stuart Ferguson, who said the donation was a substantial sum and should not be looked on as a cynical attempt at public relations.

Fonterra will donate US$5 million ($8.4 million) to the China Soong Ching Ling Foundation over five years for a co-operative charity project to provide medical care and advice to pregnant women and the mothers of infants in rural communities.

Fonterra will also look at how it can help to rebuild a safe supply chain of dairy products.

Compensation and help for those made ill are being managed by the Chinese Government.

"It's still very unclear to us what role we could ultimately play in that," Mr Ferrier said.

All San Lu products had been recalled and the Government had stopped all production.

Mr Ferrier said Fonterra was involved in discussions at a number of levels on the future of San Lu.

He said that in the eyes of consumers the scandal was a San Lu issue, not a Fonterra issue.