Murray Goulburn Co-operative has agreed on a supply alliance with Mead Johnson Nutrition (MJN). Together with the supply agreement MG has separately announced with Indonesia’s Kalbe Nutritionals, MG proceeds with its plans to build a nutritional powders plant at Koroit in western Victoria, Australia.
Under the agreement, MJN will commit to acquire certain volumes of nutritional powders from MG on an annual basis.
The parties will now proceed to formalize the detailed terms of the supply agreement.
This arrangement is in addition to MG’s existing offtake agreements with other long-term customers in the global infant nutrition industry.
The collaboration will enable the two companies to capitalize on their complementary strengths – MG’s dairy foods and nutritional powders expertise and MJN’s science-based excellence in infant and young child nutrition.
Once final terms are formalized, MG will invest US$260-US$300 million at Koroit to construct and commission its new nutritional powders facility, while MJN will co-locate a nutritional packaging plant on the site.
Once completed, the parties envisage the facilities supplying finished products for sale within the Asia Pacific region, including China.
When combined with MG’s existing fully utilized 18,000 tons per annum drying and canning nutritional powders plant in Cobram, this investment will create a sector-leading infant nutrition hub in Victoria, from which MG can supply its global nutritional customers and the company’s Devondale Natra Start infant formula to key markets.
MG says it is likely that a configuration of two 45,000 tons per annum dryers is the optimal solution to provide the required operational flexibility and higher specification dryers while still delivering the same economic return of the originally planned single 63,000 ton per annum dryer.
This approach will see the nutritional powders investment being delivered in two stages, with the initial installation of 45,000 tons per annum dryer that will be increased to up to 90,000 tons per annum as market demand increases.
