Several buyers interested in purchasing Fonterra's Dennington factory

Several buyers interested in purchasing Fonterra's Dennington factory

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INTEREST: Several parties are interested in buying the Fonterra site, the milk processor has confirmed. Photo by Morgan Hancock.

INTEREST: Several parties are interested in buying the Fonterra site, the milk processor has confirmed. Photo by Morgan Hancock.

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Fonterra management told suppliers that there were parties interested in buying the Dennington factory.

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SEVERAL non-dairy companies have expressed interest in buying Fonterra's Dennington factory.

A Fonterra spokeswoman confirmed interested buyers had approached the milk processor after the company in May announced it planned to close the plant later this year.

"We have been contacted by several non-dairy companies that have expressed interest," she said.

"We are talking with them, however these discussions are commercial in confidence."

The company said at the time of announcing the shutdown that it had explored all options for the site, including selling it, but there had been no genuine interest.

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South-West Coast MP Roma Britnell, who had accused the company of "mothballing" the site, said she was aware of several interested buyers from the dairying industry.

Ms Britnell said she met with Fonterra last week to discuss the site's future options.

"My focus is the Dennington site and keeping it open, it is a important site for our community and if we can see that continue to be operational that's what we are looking for," she said.

"It is looking promising, I am hopeful for a positive outcome."

Fonterra milk supply general manager Matt Watt said the company was preparing to exit the site and was exploring plans for possible environmental remediation.

"With local community groups and stakeholders, we are going to have to make sure that whatever it looks like post [November], it's in the shape people expect it to be," Mr Watt said.

Focus on what works

Mr Watt said closing Dennington will allow Fonterra to better utilise its remaining assets.

He said limited milk supply, drought, and the under-utilisation of the Dennington plant were the key reasons for the plant's closure.

But he said the closure allowed Fonterra to focus on the "the stuff that works" which includes the high-value product Western Star butter produced at Fonterra's Cobden factory which attracts 200,000 new consumers a year.

"By putting milk in Dennington, it doesn't create the same level of value as putting milk into Cobden and producing something like Western Star," he said.

BUSINESS MOVE: Fonterra Australia milk supply general manager Matt Watt says closing Fonterra allows the business to focus on high-value products like Western Star butter, produced at Cobden. Photo by Jackson Graham.

BUSINESS MOVE: Fonterra Australia milk supply general manager Matt Watt says closing Fonterra allows the business to focus on high-value products like Western Star butter, produced at Cobden. Photo by Jackson Graham.

"We have got a plant that can create more from a limited milk pool than a plant like Dennington.

"So we make the choice that says 'actually we are just going to double down on the stuff that works'.

"There are bits of our business in a smaller milk pool that aren't as relevant and aren't working."

He also confirmed that milk was flowing out of south-west Victoria to Fonterra's modern milk processing facility in Stanhope.

He said that increased competition on the Dennington plant for milk supply, but added it was "by no means the majority".

"Over the last 12 months we have certainly seen milk move that way," he said.

"We have times where factories here will be shut, and that will increase with only having one plant here; we will be saying 'where do we best allocate that milk?"

Mr Watt ruled out future risk to the Cobden plant, which he said was a "cornerstone" of Fonterra's Australian operations.

"Western Star is its forte," he said.

"It also has powder-drying capability, and it's a beverages plant.

"It's a cornerstone plant in terms of what we do.

"We have made our decision around our network, and what that does is make the rest of the network, and Cobden especially in this region stronger."

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