This move comes as Synlait looks to further tap into the $15 billion a year demand for infant formula in China.
Synlait said the investment will allow it to become one of only two manufacturers in the world to produce lactoferrin as a spray dried powder.
Lactoferrin is a bioactive protein extracted from milk that provides significant antibacterial protection and other health benefits for people of all ages.
It is in demand globally for health foods including infant formula and adult nutritional powders.
With the new capability, Synlait Milk expects production to reach 18 tonnes within four years of commissioning in late 2013 to early 2014.
Synlait Milk chief executive Dr John Penno said the decision to invest in the high value ingredient has been stimulated by contracts with eight significant customers for infant formula in China.
“There is a global shortage of lactoferrin driven largely by the demand for infant formula. In China alone total sales of infant formula are worth US$15 billion plus a year and growing by 15% with the addition of 18-20m new babies annually,” Penno said.
