Christchurch-headquartered Mataura Valley Milk is postponing the construction of its $90 million dairy processing plant near Gore due to delays in closing funding because of the credit crisis.
It follows the derailment of the PGG Wrightson deal to buy Silver Fern Farms after the banks providing its financebacked out this week.
Mataura's chief executive Chris Shelley stressed this was just a postponement of construction. The new plant, which would have been operational by August next year, was now set to begin commercial production in August 2010.
Shelley said good progress had been made on the project. Consents and planning were already at an advanced stage.
"The directors of Mataura Valley Milk feel it is prudent to postpone construction, as delays in closing funding had introduced risk of missing the start of the 2009 milking season. However we have made substantial progress with our fund providers to ensure we are ready to re-start the project next year."
The $90 million plant, located 7km north of Gore, will produce milk powder for high specification nutritional products and the nutraceutical markets of Asia and the Middle East. It will have an annual processing capacity of 200 million litres.
"We believe the demand for high quality New Zealand dairy products will remain strong, despite the recent, desperately tragic events in China.
"Mataura Valley Milk is well positioned to supply highly functional instant whole milk powders for the international dairy ingredients market. The New Zealand brand is as strong as ever."
The company, formed in March to process milk from Southland's growing number of dairy farms, is headed by Shelley, an engineer with particular experience in dairy processing projects in Asia, and South Island businessman James Williams. The pair own around 80 per cent of Mataura Valley, with the remainder retained by financial investors.
Its advisers include leading dairy figures John Shaskey, of Global Dairy Network, and Max Parkin, former chief executive of Southland Dairy Co-operative.
