Westland Milk Products is joining forces with Chinese company Ausnutria to create a new infant formula venture.
The two firms have signed a joint venture agreement to create a new infant formula blending and canning company, to be called Pure Nutrition, based in Canterbury.
It will be 60 percent owned by Ausnutria, an infant formula company, and 40 percent by Westland Milk Products.
The Chinese firm will lend the new company $32 million to build and run the plant at Rolleston, near Christchurch.
Chairman Matt O'Regan said Pure Nutrition would be established through an initial investment by Ausnutria of $4.5m cash, and the transfer to Pure Nutrition of land owned by Westland at its Rolleston site, which has a value of $3million.
The factory should be up and running late next year and is expected to produce around 20 million cans of milk formula a year.
Westland chief executive Toni Brendish said the agreement commited the joint venture to buy a minimum of 3000 tonnes of formula in the first year and 5000 each year after that.
For the first five years profits would be re-invested into the business and after that Pure Nutrition's earnings were expected to provide dividends to both partners.
Westland can also use the facility to produce canned products for its own customers and markets.
The dairy co-operative is one of several New Zealand primary sector companies turning to invesment from Chinese firms.
Silver Fern Farms' controversial $260 million deal with Shanghai Maling received the final tick of approval from the government this month.
And Mataura Valley Milk near Gore is planning a $200m milk powder plant in which which state-owned China Animal Husbandry Group will have a 72 percent share and farmers a 20 percent stake.
In a statement to the Hong Kong stock exchange Ausnutria chairman Yan Weibin said the joint venture would further diversify its milk source and enhance its capability to produce infant formula for anticipated growth in demand in China and other countries.
