Oceania Dairy to invest $200m more

Oceania Dairy's milk processing factory at Glenavy. Photo by David Bruce.

Oceania Dairy, the South Canterbury-based dairy company owned by China's Inner Mongolia Yili, is planning to build a state-of-the-art laboratory and to invest at least another $200 million in New Zealand operations.

It is in the process of commissioning the second stage of its development, which includes a canning and blending operation for infant formula and two UHT manufacturing lines, general manager Roger Usmar said.

The first stage involved building a 10-tonne-an-hour infant formula capable dryer. Total investment so far is around $400 million.

The third stage of development will likely include a larger dryer and a lactoferrin plant.
Oceania has a small on-site laboratory for testing but expects to begin construction of a far larger laboratory to support the operation by mid-2018, Mr Usmar 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.

Most of the output is shipped to China.

Total investment, including the lab and the third stage of development, will "certainly be a minimum of $600 million and possibly north of $600 million,'' Mr Usmar said.

With another dryer the company will be looking to potentially double or even triple the milk intake.

Oceania Dairy currently has 73 suppliers, all within a 50km radius of its Glenavy factory and there was a "healthy interest'' from other farmers keen to supply Oceania, Mr Usmar said.

Oceania reported a $6.8 million loss in calendar 2016, from a loss of $16.3 million in 2015 as revenues rose to $164 million from $141 million in the previous 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.

Yili acquired the fledgling Oceania in 2012 after the previous owners failed to raise enough funds to create their own dairy factory, gaining access to 38ha of land at Glenavy.

- BusinessDesk