Green light for $102m milk plant

By Viv Logie

Westland Milk Products plans build a new nutritional dryer on its Hokitika site — a $102 million investment — were given the green light at the company’s board meeting yesterday.
Westland Milk Products’ board approved funding for the nutritionals dryer and a resource consent application to build the $102m purpose-built spray drier, referred to as D7 — which also includes new batching equipment, high specification mixing equipment, additional warehousing, another laboratory and a 25kg packing line — is underway with the Westland District Council (the hearing was held in Hokitika on 25 March).
Chief executive Rod Quin said today that the company was confident the consent would be granted with conditions to meet any local concerns around noise, traffic and air discharge.
“Westland has a strong history of producing high quality milk powders and butter,” Mr Quin said, “but we have made a strategic decision to shift the balance of our production toward high-end nutritional products, such as infant formula.
“Nutritionals consistently deliver higher margins than milk powders and will lead to relatively higher pay-outs for our shareholders as well as placing Westland on pathway to a more secure and sustainable future.”
Mr Quin said that the the D7 investment would create up to 36 new jobs in Hokitika, and local contractors would be used as much as possible in the build.
“The project equates to a significant investment in the West Coast economy,” he said.
“Not just from work that will go to local firms, but also long term because of the increase in permanent jobs and the anticipated additional income it will generate for our suppliers.”
The investment in D7 will build on the capability and commercial success of the upgrade to Drier Six (D6) last season, he said.
“The demand for nutritional products continues to grow; and, while China is a key market for these products, we also have significant contracts in South East Asian markets and Australasia that broaden our customer base. Many of our current customers are expected to increase their purchases as a result of this project.”
D7 will allow Westland to produce an additional 23,000 metric tonnes of nutritional product per season.
Westland’s board has approved funding for the project from a combination of debt and retentions.
The company has engaged the services of Babbage Engineers as project managers and the plant will be built by Tetra Pak.
It is expected to be commissioned in August 2015 and generate sales of $115m per year when at full capacity.
The approval for D7 comes on top of a series of investments by Westland including the D6 dryer last season, a new boiler at Hokitika and investigations into a possible milk processing plant at its Rolleston site.