Shanghai Pengxin increases NZ investment

Shanghai Pengxin, the private Chinese conglomerate that's been the subject of controversy due to its purchase of large tracts of local farmland, today revealed further investments in New Zealand.

The company is party to two agreements that were ceremonially formalised in the presence of China President Xi Jinping and Prime Minister John Key this afternoon at the Agri-tech Innovation Showcase in Auckland.

The first partnership is with NZ dairy processing manufacturer Miraka and leading Chinese dairy company Mengniu, and will result in the accelerated development of Miraka’s ultra-high temperature (UHT) milk processing plant in Taupo.

The second is a collaboration with KuangChi Science, a Hong Kong-listed company that specialises in innovative space services, and involves the refinement and launch of a “near-space balloon” in New Zealand in the first half of next year.

Shanghai Pengxin chief executive Gary Romano says the three-way Taupo UHT plant deal is off the back of an existing pact between his company and Miraka, which is owned by a group of Maori whanau trusts and incorporations.

“We wanted some UHT product for sale into China, so Miraka agreed to make the $27 million capital investment in building a new plant and we committed to off-take volume from that plant and to use its entire capacity within three years,” he says.

That plant is now in its first season of production.

The agreement signed today is the result of a developing relationship between Shanghai Pengxin and Mengniu, which Mr Romano describes as “the UHT player in China.”

Mengnui was so enthusiastic about UHT product that Shanghai Pengxin supplied to it that it joined the original deal.

“The end result is that the initial commitment to fill the plant in three years will be realised in two with us working together, so in year three we’ll need have an additional capital investment to expand the size of that plant,” says Mr Romano.

“At this point we’re projecting, we’ll double the plant’s size, and by year five we’re looking to double it again, which will result in capital investment and jobs and so on.”

As for the venture with KuangChi Science, Mr Romano agrees with a laugh that “it’s something a bit different” for Shanghai Pengxin, representing the company’s first foray into this kind of technology.

Dubbed the Traveler, the near-space balloon floats at twice the height flown by commercial airlines, weighs approximately one tonne and is 40 metres in diameter, and is an advance on the similar balloons launched by Google last year.

“The difference with this balloon is the construction materials, which are subject to a number of patents,” Mr Romano says.

“ Effectively it means the balloon is lighter and much more robust than the balloons Google used, with the result you can take up a much more significant payload.”

Those payloads potentially include applications to provide Wi-Fi access to underserved and remote regions around the globe, as well as resource mapping, traffic control, shipping communications, disaster relief, and search and rescue activities.

“It’s a really interesting technology,” says Mr Romano. “I think there are a few steps to go through to get it to commercial reality but in terms of big picture and the potential it has, it looks like there’s an opportunity here to create something that’s useful to a lot of people.

“At this point we’re leaving the commerciality for somewhere down the track – right now we’re just figuring out if there’s a technology here that we can develop and exploit. We’re really up at the front end of the development curve.”

That development process will see a series of tests conducted in New Zealand in the first half of 2015.

“There’s quite a bit of logistics involved,” Mr Romano says, “including selecting a launch site, and making sure you’re not going to foul commercial airlines and have favourable wind patterns and so on.

“So we’re working with [air navigation service provider] Airways NZ to helps us with all those details.”