By Fiona Rotherham
Fonterra Co-operative Group's Australian unit will invest $141 million in building a new cheese plant at its Stanhope factory in Victoria after its former one was destroyed by fire a year ago.
The dairy giant said the cost of the new plant would be partly met by its insurance payout from the fire for damage and loss of business, the AU$74M it got from the sale of its 9 percent stake in Australia's Bega Cheese in October, and other smaller recent divestments across the Tasman.
It's also received an undisclosed amount of financial assistance from the Victorian government through its Regional Jobs and Infrastructure Fund.
The state government's website said infrastructure grants under the fund are capped at AU$500,000.
Fonterra Oceania managing director Judith Swales said the new plant would not increase the co-operative's debt levels.
The dairy exporter reduced capital expenditure this financial year to return debt levels to a debt to equity ratio of between 40 to 45 percent after spending $2.4 billion in the past three years on more stainless steel to cope with extra milk volumes and its Beingmate stake.
The loss of cheese production after the fire was one of the main contributors to the underperforming Fonterra Australia reporting a $106M drop in revenue to $1.56B in the 2015 financial year though the co-operative expects to return to profit this financial year.
The new plant will be able to produce 45,000 tonnes of cheeses each year including parmesan, gouda and mozzarella, up from 15,000 tonnes at the old plant. Swales said the new plant will require significant growth in the local milk pool by 2020.
Construction of the new plant will begin next year, and is expected to be completed in 2017.