New Zealand's Fonterra Co-operative Group, the world's biggest dairy trader and former partner of Sanlu Group at heart of China's milk contamination scandal, plans to buy Sanlu's shares in a joint dairy farm.

Fonterra Chairman Henry van der Heyden said Monday his company, who owns 85 percent of the dairy farm in Tangshan, a city in north China's Hebei Province, plans to buy the remaining 15 percent owned by Sanlu, without mentioning how much it plans to spend.

Sanlu's shares in the farm was put up for sale in the fourth and planned auction of Sanlu's assets Monday in the northern Chinese city of Shijiazhuang. The auction failed.

The dairy farm was established in April 2007 with an investment of 144 million yuan (21 million U.S. dollars) from Fonterra and Sanlu. It is the first dairy farm that Fonterra set up outside New Zealand.

It has now 3,000 milk cows, of which 2,400 have begun giving milk. Each cow gives an average of 8,000 liters of milk every year.

Sanlu Group, which was based in Shijiazhuang, Hebei Province, had been China's leading seller of milk powder for 15 years until the melamine adulteration scandal broke in September last year. The group's revenue hit 10 billion yuan in 2007.

The company's tainted baby milk powder was found to have caused the deaths of at least six children and sickened more than 300,000 others. Fonterra had a 43-percent stake in Sanlu Group.

Sanyuan Group, a dairy producer headquartered in Beijing, bought Sanlu's core assets at 616.5 million yuan in the first auction on March 4.

(Xinhua News Agency April 14, 2009)