Canterbury's Synlait Milk said it would spend $15 million to upgrade its special milks drier at Dunsandel to meet strong demand for infant formula in China.
The investment will enable Synlait Milk to become one of only two manufacturers in the world to produce lactoferrin as a spray dried powder, and will allow the company to make dairy ingredients to a pharmaceutical standard, the company said in a statement.
Synlait Milk's plant upgrade will add to a list of capital projects worth more than $1 billion that are either under way or on the drawing board as the New Zealand dairy industry gears up for increased demand from Asia for milk powder, cheese, UHT milk and baby formula.
Lactoferrin is a protein extracted from milk that is said to provide antibacterial protection and other health benefits for people of all ages, Synlait said. It is in demand globally for health foods including infant formula and adult nutritional powders.
Synlait Milk said it expects production to reach 18 tonnes within four years of the plant's commissioning in late 2013 to early 2014.