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Dairy giant Fonterra has announced a $75 million investment to expand butter production at its Clandeboye site in South Canterbury, New Zealand.

The new investment, revealed in the company’s annual results, is part of a broader plan to invest up to $1 billion over the next three to four years in projects aimed at driving efficiency and boosting returns for its shareholders.

The project will see the construction of a new butter line at Clandeboye, increasing the site’s butter production capacity by up to 50,000 metric tonnes per year.

The expanded facility will produce a range of butter formats tailored to global ingredients customers and professional kitchens, with the capability to meet halal and kosher certification standards for export markets.

Mike Hurrell, CEO, said the expansion aligns with Fonterra’s long-term strategic focus on higher-value dairy categories. “This investment supports that goal by increasing our production of a high-value product and improving our product mix by adding value to milkfat.”

The new butter line will produce both lactic and unsalted butter, with Hurrell adding: “Butter remains a highly valued product in our portfolio, and this investment ensures we’re well placed to meet evolving global demand for quality dairy fats.”

This expansion is Fonterra’s third major investment in the South Island in the past year, following $75 million for an advanced protein hub at Studholme, aimed at supplying high-protein ingredients for the medical and sports nutrition market, which is expected early 2026.

The company also invested £150 million in a new UHT cream plant at Edendale, expanding capacity for high-value foodservice products.

In addition, Fonterra recently completed a $64 million project at Clandeboye to convert two coal boilers to wood pellets – part of its plan to exit coal use by 2037.

According to Fonterra’s COO, Anna Palairet, the investment strengthens the co-operative’s South Island network and enhances flexibility and resilience across its manufacturing footprint.

“This investment is part of Fonterra’s broader strategic asset roadmap supporting long-term growth in high-value dairy categories,” said Palairet. “The expansion will create 16 new jobs at the site, supporting the local economy.”

Construction is scheduled to begin in December 2025, with commissioning set for early 2027 and first production expected in April of that year.