4 Dec 2008

Fonterra says San Lu not selling milk products

9:01 pm on 4 December 2008

Fonterra has corrected reports that its part-owned Chinese dairy company is selling milk products again.

San Lu, which is 43% owned by New Zealand dairy giant Fonterra, was forced to stop sales earlier this year after some milk powder was found to be contaminated with melamine, a toxic chemical used in some plastics.

China this week lifted to six the number of babies believed to have been killed from drinking tainted milk formula and raised the number affected to 294,000.

Reports from China said that San Lu and other dairy companies implicated in the toxic milk scandal were trading again.

But Fonterra says it has checked the reports and confirmed that neither San Lu nor any of its subsidiaries are currently producing or selling product under the San Lu brand.

It says the Chinese government has approved several associated companies to produce and sell product in China, but this is not San Lu brand product.

Fonterra says it does not have any direct stake or relationship with these companies.

As a result of the fallout, Fonterra was forced to write off most of its investment in San Lu.