Fonterra says a revamped Dairy Industry Restructuring Act (DIRA) creates “a more level playing field”.
Fonterra chief executive Theo Spierings and A-ware Food Group chief executive Jan Anker have today confirmed the partnership would proceed and signed a final agreement.
Under the agreement a greenfields site will be developed where A-ware will operate a cheese plant and Fonterra will operate a dairy ingredients plant alongside it.
Cheese will be produced for A-ware's customers in Europe and the whey and lactose produced will be processed into premium nutrition dairy ingredients for Fonterra's global customer base.
Construction of both plants is scheduled to be completed in late 2014.
The investment fits well with the strategic priorities of both companies, says Spierings.
"Fonterra has substantial intellectual property in the manufacture of functional whey protein ingredients and has been looking for some time for a source of high quality whey to enable it to commercialise these innovations for customers around the world."
Anker says the partnership will build on A-ware's reputation as a significant provider of premium cheese in Europe with a strong history and network.
"A-ware is well placed to integrate the new cheese plant into its supply chain so it can expand its service offering with increased flexibility for a growing customer base in Europe."