Arla Foods, the dairy giant behind Lurpak butter and Cravendale milk, today (16 October) revealed that it plans to build the world's largest fresh milk dairy near London.

The group said the site on the "outskirts" of the UK capital would have a capacity of 1bn kg of milk and be up and running in 2012. Around 500 jobs would be created, Arla added.

"The project has now started and we are currently finalising the land search. Detailed plans will be presented to the Arla Foods board in early 2010, said Peter Lauritzen, CEO of Arla Foods UK.

"We already have an industry-leading site at Stourton, in Leeds, but our new, cutting-edge, facility in London will be world leading and take dairy processing into the next generation."

The investment comes after a series of restructuring moves from Arla this year.

In April, Arla said it would cut 250 jobs across its global operations, including in Sweden, the UK and in other unnamed markets.

In January, the company said it had decided to shutter the site in Northallerton, north Yorkshire and switch cream production to its facility in Stourton.