Corio Bay Dairy Group’s Milk Spray Drying Facility

Corio Bay Dairy Group (CBDG) is developing an organic milk spray drying facility in Geelong, Victoria, Australia.

CBDG is a joint venture (JV) formed in April 2018 by Wattle Health Australia (45%), Organic Dairy Farmers of Australia (ODFA) (50%) and Niche Dairy (5%). Wattle Health Australia will have first rights to purchase the products developed by CBDG, followed by ODFA.

The partners are making an estimated investment of more than A$55m ($40.5m) in the facility. Construction started in September 2018 and is expected to be completed by Q3 2019.

The facility will help the partners enhance and capture new international markets for organic milk powder and other dairy products. The first delivery of organic milk powder is expected in Q4 2019.

Location

The facility will be developed on land purchased in July 2018 by CBDG. The location will enable CBDG to utilise the infrastructure and human resources of ODFA’s existing facilities in Geelong city, which will save costs during project development and after commissioning.

CBDG’s milk spray drying facility details

The facility will house a large milk spray dryer with a capacity to process up to 200,000l of fresh organic milk a day.

The skim from the supplied liquid milk will be fed into the dryer to make infant milk formula, while the cream will be fed to produce other nutritional dairy products such as butter and cheese.

The milk will then be heated and fed into a drying chamber. Once dried, the product will then move into the main powder fraction and through a bag filter to remove dust and other impurities.

The plant can produce up to 10,000t of dried milk powder a year at full production. The organic milk powder is proposed to be packed through Blend and Pack, a packaging facility certified by the Certification and Accreditation Administration of the People’s Republic of China (CNCA).

The final product will be distributed to domestic and international distribution partners under ODFA’s True Organic brand, as part of the terms of a license agreement signed between CBDG and ODFA.

Financing for CBDG’s milk spray drying facility

Wattle Health plans to raise A$77.9m ($57.4m) funding for the construction of the facility and working capital for CBDG. It plans to raise A$20m ($14.7m) through the private placement of 46.3 million new shares to institutional investors and A$37.9m ($27.9m) through a non-renounceable retail entitlement offer.

The company has also entered a three-year loan facility agreement with Prospere Advisory for A$20m ($14.7m).

Milk supply agreement

CBDG has signed a milk supply agreement with ODFA for up to 46 million litres of organic liquid milk a year, which can be increased to up to 60 million litres.

The company plans to source milk from third parties in case ODFA cannot fulfil the minimum supply amount.

Contractors involved

ODFA has selected Australian company Dairy Process & Developments for project management and construction activities. ODFA will also look after the separation and standardisation process.

K&L Gates acted as the advisor for the capital raising for the development of the project.