(Yicai Global) July 7 -- China's Certification and Accreditation Administration (CAA) has suspended the registration of a production plant acquired by popular Australian milk powder maker Bellamy's Australia Ltd [ASX:BAL] last month, creating a question mark over whether the company can complete formula registration to sell its product in China.
The CAA yesterday published the latest list of Australian infant formula makers that are registered in China. It shows that registration of Camperdown Powder Pty Ltd. with a registration code of 1179 was suspended on July 6, 2017. Bellamy's bought the production plant located in Braeside, Melbourne, at high prices one month ago. Bellamy's announced a trading halt this morning.
Though the CAA did not offer a reason for its suspension, Song Liang, a senior dairy expert, told Yicai Global that based on information he has got, it is because the authorities believe the plant is too small to meet the relevant requirements on production equipment and conditions.
New policies put into force since last October require that infant milk formula firms failing to register their formula shall not be allowed to produce and sell products in the Chinese mainland after Jan. 1, 2018.
Bellamy's is known for its organic infant formula and has long adopted an asset-light operating model. Its products are supplied by Bega Cheese Ltd.'s [ASX:BGA] plant in Tatura, Victoria. Bega Cheese has no milk powder brand. Bellamy's hoped that Bega Cheese could apply for formula registration for it. However, Mead Johnson Nutrition Co. [NYSE:MJN] took over the Tatura plant in northern Victoria from Australian dairy company Bega Cheese this year, which is a contract manufacturer of Bellamy's, forcing Bellamy's to acquire Camperdown Powder to enter the Chinese market.