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Fonterra Builds New Clandeboye Milk Powder Drier

Media Statement 29 August 2003

Fonterra Builds New Milk Powder Drier at Clandeboye Plant

Fonterra has announced plans to expand its Clandeboye South Island site with a new milkpowder drier to be operational for the 2004/2005 season.

Fonterra's Director Operations, Mr Max Parkin says the expansion is all about maximising payout to farmers through increasing Fonterra's milkpowder capacity and product mix flexibility.

"The co-operative is earning good returns on milkpowder and this trend is expected to continue well into the future." Mr Parkin says Fonterra considered several locations for expansion, and the Clandeboye plant was the logical choice. The decision to expand Clandeboye takes advantage of the existing site scale and leverages the skills of the current staff.

"Fonterra's challenge is to match customer demand with milk supply. Therefore it makes sense that any plant expansion in New Zealand should take place in the region where milk supply can satisfy the new drier capacity. Forecasts are showing milk volumes in Canterbury will grow by about 6% a year over the next five years, which is a perfect match for this drier capacity," says Mr Parkin.

Mr Parkin says the new drier will also ensure the co-operative meets long-term customer demand for milk powder and is consistent with Fonterra's strategic objective of being the world's lowest cost commodity producer.

"The creation of Fonterra has allowed us to dramatically shorten the distance between our manufacturing teams and customers. The result is a much improved customer service level. Output of the new drier is focused on the Asian market."

Mr Parkin says new port infrastructure also supports plant expansion at Clandeboye.

"Fonterra, in partnership with PrimePort, has recently built new storage facilities at the Timaru Port. This infrastructure will support the increased volumes of product shipped to overseas customers from the Clandeboye plant," says Mr Parkin.

The new drier has the capacity to process 3,700m3 of milk per day.

Fonterra estimates approximately 25 local jobs will be created by the expansion.

- ENDS -

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