What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
Milk processing in South Canterbury – one of New Zealand's fastest growing dairy regions – will be boosted about about 9 million litres of additional capacity to help keep pace with rising milk volumes.
Fonterra managing director global operations, Robert Spurway says the expansion would play an important role in delivering the Co-operative's growth strategy.
"With the steady increase in milk production, a strong schedule of capital investment in processing and manufacturing will be key to delivering on our V3 strategy – driving value, volume and velocity.
"Should it go ahead, the investment at Studholme will bring much needed processing capacity to the South Island as well as optionality to make the products that bring the greatest returns to our shareholders."
Spurway says the Studholme site, due to its location, is the ideal option for the proposed development. If approved, the expansion will take a phased approach, with construction beginning on the first drier within the next five years, followed by the potential installation of a second drier within the next 10 years.
Mitigating environmental impacts is a high priority for the build, with plans including a range of wastewater treatment options with particular care given to the nearby Wainono lagoon. Fonterra is also looking to minimise the use of coal, and is investigating options for energy efficient boilers capable of burning biomass.
Spurway says the upgrades would bring an injection into the local economy and are an exciting prospect for those living in and around Studholme and Waimate.
"As with any build of this scale, local employment would be one of the major winners. With each new drier our site and tanker staff would grow by around 125 new positions, with builders and contractors to complete the build factored in on top of that."
"Our teams are hard at work to complete our proposals for this potential development and will ensure that we share them with our neighbours and the wider community before they are finalised," Spurway says.
