Scandinavian dairy giant Arla Foods said today (18 April) that its Chinese venture has started building work on milk powder plant in the country.

The venture, with China’s leading dairy group China Mengniu Dairy, is building the facility next to a current plant in the region of Inner Mongolia.

Arla said the project, which costs around US$40m, would quadruple the venture’s capacity. Mengniu Arla’s production director Ulrik Sletten said: “The new plant will be of a very high technological standard along the same lines as Arinco in Denmark and Vimmerby in Sweden. Our big challenge now is to keep to the timetable. Bearing in mind the extremely cold winters, the building itself must be completed before November.”

Arla claimed the site will become China’s “largest and most advanced milk powder plant”.

The two companies formed Mengniu Arla last year. The venture also announced that it would move its headquarters to Beijing from Hohhot in Inner Mongolia.

Earlier this week, Mengniu posted a 60% leap in profits for 2006 thanks to the growing number of dairy consumers in China.

The performance helped boost Mengniu’s share of China’s liquid milk market to 33%, according to figures to the end of December last year.