Fonterra Shareholders' Fund Prospectus and Investment Statement

SECTION 1
About
Fonterra continued
NZ Milk ProducTS:
an integrated supplier
of dairy nutrition
Fonterra’s NZ Milk Products business
operates one of the world’s largest and
most integrated milk processing networks
producing a range of dairy nutritional
products. As the largest global milk processor,
Fonterra has a strong market presence and
sales network in the higher-growth emerging
markets, as well as in mature markets.
New Zealand milk supply
and manufacturing
In the 2011 / 2012 Season, NZ Milk Products
collected approximately 17 billion litres of
New Zealand milk and processed approximately
16.4 billion litres through 27 processing sites.
540 million litres was supplied to independent
processors as required by DIRA. Fonterra
manufactured 97% of the milk it processed
into a range of dairy nutrition products
including dried powders, various food
ingredients, butter and cheese.
The remaining 3% accounted for fresh milk
supplied to local grocery and other retail
customers. In FY2012, approximately 13% of
NZ Milk Products’ sales volumes that were
manufactured from New Zealand milk was
sold to Fonterra’s regional businesses.
To help position Fonterra to meet the expected
rise in worldwide demand for dairy products
and growth in New Zealand milk supply,
Fonterra has invested approximately $530
million in processing facilities over the past
five years, principally to expand milk powder
production capacity in the South Island.
In addition, Fonterra has recently acquired
the milk processing assets from the receiver
of New Zealand Dairies Limited. Its assets
included the Studholme processing plant
in South Canterbury. The Studholme plant
processes around 180 million litres of milk per
Season principally for export, and complements
Fonterra’s new Darfield plant that began
processing in August 2012.
Fonterra’s Darfield
processing plant
Fonterra’s processing plant in Darfield is
situated on a 650-hectare site in one of New
Zealand’s fastest growing dairy regions, the
central South Island. Fonterra has initially
invested in a 15 tonne per hour dryer and
facilities (D1) which began operating in
August 2012. Currently, Darfield has the
capacity to convert 2.2 million litres of milk
per day into milk powder for export.
Construction of a second dryer is currently
underway (D2), together with extra
warehouse space and a railway connection.
With a 30 tonne per hour capacity, the D2
dryer will be the largest in the world,
surpassing Fonterra’s ED4 facility at
Edendale. Once the D2 dryer is completed,
Darfield will be able to process up to 6.6
million litres of milk per day.
The efficiency and capacity of Darfield will
help drive further performance improvements
for the NZ Milk Products business.
FONTERRA’S KEY NEW ZEALAND MILK PROCESSING ASSETS 1 AND CATCHMENT AREAS 2
Key NZ catchment areas
Fonterra milk processing site
Key site
1
4
2
3
1. KAURI
Capacity: 3 million litres per day
Ouput: 123,000 tonnes per Season
Products: WMP 3 , SMP 3 , butter, AMF 3 , nutritional powders
2. TE RAPA
Capacity: 7 million litres per day
Ouput: 313,000 tonnes per Season
Products: WMP 3 , SMP 3 , butter, AMF 3 , cream cheese,
frozen cream
5. DARFIELD
Capacity: 2.2 million litres per day
Ouput: Production began August 2012
Products: WMP 3
6. CLANDEBOYE
Capacity: 13 million litres per day
Ouput: 415,000 tonnes per Season
Products: WMP 3 , SMP 3 , MPC 3 , cheese, butter, AMF 3 ,
WPC 3 , lactose
3. LICHFIELD
Capacity: 2.8 million litres per day
Ouput: 63,000 tonnes per Season
Products: cheese, WPC 3 , WPI 3
7. EDENDALE
Capacity: 13.2 million litres per day
Ouput: 416,000 tonnes per Season
Products: WMP 3 , SMP 3 , BMP 3 , MPC 3 , cheese, casein,
AMF 3
5
6
4. WHAREROA
Capacity: 13.6 million litres per day
Ouput: 423,000 tonnes per Season
Products: WMP 3 , SMP 3 , BMP 3 , MPC 3 , casein, cheese,
butter, AMF 3 , WPC 3 , WPI 3
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NEW ZEALAND TOTAL FOOTPRINT
Capacity: 82 to 84 million litres per day
Output: 2.5 million tonnes per Season
Sites: 31 sites (NZ Milk Products – 27, ANZ – 4)
Key manufacturing sites include: Whareroa, Te Rapa, Kauri, Lichfield, Clandeboye, Darfield, Edendale
Source: Fonterra
1 Each dot represents a milk processing site. 27 sites form part of NZ Milk Products and 4 sites form part of ANZ. Only key manufacturing sites are described in detail.
2 Fonterra milk production density for the 2011 / 2012 Season based on 10-kilometre grids.
3 AMF means anhydrous milk fat, BMP means buttermilk powder, MPC means milk protein concentrate, SMP means skim milk powder, WMP means whole milk powder, WPC means whey protein
concentrate and WPI means whey protein isolate.
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