In a statement yesterday, the co-operative said site works would begin next month and the first product was due to come off the line in 2026.
About six new roles at the site would be created and a large number of contractors involved in the build would come from Canterbury.
Fonterra bought the milk-processing plant in 2012 following the receivership of Russian-owned New Zealand Dairies Ltd, which commissioned the plant in 2007 at a cost of $108m.
It was originally built as a vegetable-processing plant.
Under Fonterra’s ownership, it has specialised in producing milk powders, including standard and high-heat whole milk powders, buttermilk powder and whey protein concentrate powder.
It employs more than 47 people.
During peak milking season, the plant processed up to 5.4 tonnes of milk powder an hour, the statement said.
All final product was exported via the Port of Timaru with the majority of products sold internationally on the GlobalDairyTrade (GDT) platform.
The statement said Fonterra’s proteins had enhanced functionality and were designed to perform well in premium product applications such as medical and high-protein sports nutrition.
Fonterra president global markets ingredients Richard Allen said the co-operative’s dairy ingredients were sought after by customers globally.
"We see significant opportunities in the global high-protein dairy category, which is projected to grow by close to US$10 billion [$NZ16b] over the next four years, at an annualised growth rate of 7% per annum.
"Increasing our manufacturing capacity for functional proteins will enable us to continue to strengthen our offerings with existing customers as well as attract new business," he said.
The project team reviewed Fonterra’s worldwide asset network before deciding on the Studholme site.
"It’s pleasing to see we are able to expand an existing site to produce these high-value ingredients.
"The Studholme site was chosen as it is the right size, relatively new and had been built with future expansion in mind.
"It makes sense economically and we’re confident in the longevity of the site to supply these ingredients for the long term."
The site would also continue to support the South Island’s milk processing, while the project would also support the conversion of Studholme’s existing coal boiler to a coal-free alternative in line with Fonterra’s commitment to exit coal by 2037.
Last week, Fonterra announced a 50c increase in the forecast farm-gate milk price midpoint for the 2024-25 season, alongside an uplift to the 2025 financial year advance rate schedule.
It advised its 2024 financial year earnings were forecast to be at the top end of the announced range of 60c-70c per share.
Chief executive Miles Hurrell said the announcements reflected the recent lift in GDT prices as well as the strength of the co-operative’s balance sheet.
