Fonterra investing A$165m in Australian operations

By Jim Cornall contact

- Last updated on GMT

Fonterra's cheese plant at Stanhope is set to double in size following the company's announcement of investments at several of its facilities in Australia.
Fonterra's cheese plant at Stanhope is set to double in size following the company's announcement of investments at several of its facilities in Australia.

Related tags: Cheese

Fonterra Australia is matching its push to secure additional milk volumes with more than A$165m (US$133m) in capital expenditure in this financial year at key sites in Victoria and Tasmania in a move to increase capacity and meet unique demand opportunities for dairy.

It is made up of new investment of around A$130m (US$105m) to put in 500m liters of additional capacity, and a further A$35m (US$28m) for a range of annual site improvements as part of its regular capital investment plan in Australia.

The new expansion includes:

•  A$125m (US$100m) expansion at Fonterra Australia’s Stanhope cheese facility in northern Victoria to double the size of the cheese plant

•  A$12m (US$9.7m) investment in Tasmania, which includes expansion to its Wynyard cheese plant and an increase in lactose processing capacity at Spreyton

•  A further A$7m (US$5.6m) expansion at the Darnum nutritionals plant in Gippsland as well as the installation of two robotic palletisers in Bayswater in eastern Victoria to improve efficiency

•  A$13.5m (US$10.9m) for projects at Cobden and another A$8.6m (US$6.9m) at Dennington in western Victoria

René Dedoncker, managing director of Fonterra Australia, said the company has a clear strategy that is delivering sustainable returns.

“To create value, we need to invest to stay ahead of the demand curve. These investments support our aim to secure positive returns back to our farmers on both sides of the Tasman,”​ Dedoncker said.

Increased capacity

He said Fonterra Australia will play to its strengths in cheese, whey, nutritionals, and butter, increasing production capacity to meet rising domestic and global demand, but filling its expanded capacity would mean securing more supply.

Dedoncker said the Stanhope investment largely focuses on expanding the site’s cheese making capacity, and doubling the daily milk volumes it can process.

The investment will double the size of the cheese plant, increasing cheese production by a further 35,000 metric tonnes for a range of cheeses including cheddar and mozzarella. Stanhope can currently produce 45,000 metric tonnes of product including cheddar, mozzarella, gouda, parmesan, pecorino, romano and ricotta.

Ramping up production

At Fonterra Australia’s largest site, Cobden, funding is earmarked for robotic palletisers and improvements to the butter plant that produces the Western Star brand, while the investment at Dennington is for a new 25kg packing line for nutritional powders and efficiency improvements. 

The Wynyard investment will support an annual increase in cheddar cheese production by around 3,900 metric tonnes and increase the daily milk volumes processed from 1.3m liters to 1.5m.

At Darnum, funds are earmarked to support higher production of nutritional powders, whole and skim milk powders for the domestic and international export markets.

In total the capacity investments will create around 36 jobs, in addition to generating construction work during the development phase.

More milk needed

Dedoncker says more capacity needs more milk and Fonterra Australia is working hard to secure this.

“Our Australian milk pool has grown by 400m liters this season, and with this new investment we plan to grow our milk further which we expect will come through growth from our existing farmers who wish to grow, coupled with milk from new suppliers joining Fonterra.”

Fonterra Australia’s total milk intake is now 2bn liters in Victoria and Tasmania, with the company employing an additional 15 drivers after investing more than A$8m (US$6.5m) in 14 truck and trailer units across its milk collection regions in Victoria and Tasmania.

Related topics: Manufacturers, Fonterra

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