Fonterra, the world's biggest dairy exporter, is looking at signing a deal with Netherlands-based A-Ware Food Group to set up a new European cheese and dairy ingredients factory.
The companies have signed a memorandum of understanding where A-Ware will operate the cheese plant and Fonterra the dairy ingredients plant as both parties seek a new pivot in their respective supply chains.
Whey and lactose produced onsite will be processed into ingredients and supplied to Fonterra's customers in Europe and Asia, while A-Ware will look to build its existing European base.
"We are producing more milk powders in New Zealand and therefore need alternative sources of whey to meet growth requirements," Fonterra chief executive Theo Spierings said.
"We also need more lactose for our global ingredient business."