The Sanyuan Challenge Australian Dairy, the first dairy joint venture between Australia and China, has today commenced operations.
Officially launched at a formal function at Blake Dawson Waldron, the initial JV investment was shared equally between Beijing Sanyuan Foods and Challenge Dairy Cooperative. The JV forecasts initial investments of US$27 million and is reported to have an export earning capacity in excess of $270 million over the next 5 years.
Based in the Capel region south of Perth, the business is slated to transform 300,000 tons of fresh milk annually into dried milk products, yoghurts and cheeses. Most produce will be shipped to China with the bulk of the remainder exported to South East Asia.
The JV is expected to significantly increase milk production in Western Australia with considerable flow on effects to the WA dairy industry.
Blake Dawson Waldron lead partner on the deal Martin Kudnig said: “The Sanyuan Challenge Australian Dairy joint venture is significant in that it provides an extension of Chinese investment in Australia which until recently, has focused primarily on resource projects such as LNG and iron ore.
“This move into agribusiness demonstrates the desire of many Chinese entities to vertically integrate their businesses – they don’t just want to buy products, they want to produce them as well. This way they gain valuable expertise through direct involvement in the upstream production process.”