News of a $200 million milk plant to be built 5km north of Gore has been enthusiastically welcomed by Gore Mayor Tracy Hicks, who yesterday described the announcement as "massive''.
Mataura Valley Milk will have nearly 72% Chinese ownership. Construction of the new plant is planned to start on the site of the former McNab auction yards in October, with a planned commissioning date of August 2018.
Southland dairy farmers will hold 20% of the shares and be the suppliers to the new factory.
Much of the production will be infant milk powder bound for the Chinese market, although other markets will be developed.
Mr Hicks said the council had been focused on developing opportunities in the district and had been talking to Mataura Valley Milk for some time.
"It's fantastic to see this investment opportunity come to fruition. We haven't seen this kind of investment here for a very long time.''
Mataura Valley Milk spokesman Aaron Moody, a Gore accountant, told the Otago Daily Times the new plant would create at least 100 new jobs - 60 in Gore and 40 in Hamilton, where most of the powder bound for China would be processed.
The project was first mooted in 2008 by former Mataura mayor Ian Tulloch, and a group of like-minded people, and the planning had continued since then.
Mr Moody, the son-in-law of Mr Tulloch, was brought on board and decided to stay to see the project through.
Although 72% of the company would be held by China Animal Husbandry Group, it was exciting the farmers had stayed the course and held 20% of the company.
About 6% of the company would be held by canning and distribution company Bodco.
The Chinese company held 40% of Bodco.
A global search had been undertaken to find a significant investor in the project and the first meeting with China Animal Husbandry Group was held in Shanghai about two years ago.
China Animal Husbandry Group had annual revenue of $1.6 billion and had more than 10,000 employees in 2015.
The company's largest holding is China Animal Husbandry Industry, which is listed on the Shanghai Stock Exchange.
The 26ha saleyard site had been owned by the company for several years.
"It never was a question of the land. The factory and the business were seen as reasonably big opportunities for this district.''
The Chinese company was established in 1982 and was a large-scale modern agricultural and animal husbandry group of companies.
The McNab factory would be an expansion of its dairy operations.
Changes to Chinese regulations surrounding infant milk powder production and distribution meant having a Chinese partner would help significantly, Mr Moody said.
The global infant formula market was worth $57billion in 2013 and was expected to reach $38 billion in China alone next year.
"The appetite for nutritional powders is huge with China's imports of infant formula growing by 51% in the 12 months to February 2016. Importantly, the price for infant formula and growing-up milk powders is less reliant on the global economy dairy price.''
The new pharmaceutical-standard plant would produce infant formula, ultra-high temperature (UHT) cream and small amounts of skim milk powder for global markets, using locally sourced raw milk.
The new plant is likely to be powered by both coal and electricity.
Milk plant plans
• Mataura Valley Milk to build a $200 million nutritional powders manufacturing plant north of Gore.
• China Animal Husbandry Group to take a 72% stake.
• Southland farmer shareholders to hold 20%.
• 100 jobs to be created - 60 in Gore and 40 in Hamilton.
• Construction to start in October.
