Germany’s KfW Ipex-Bank is providing €50mn in financing for the construction of a new dairy production plant in Ireland.

The loan will be extended to Tine, Norway’s largest producer, distributor and exporter of dairy products. It will go towards the firm’s total investment volume of €77mn in the new plant.

The factory will be located in Mogeely in the south of Ireland and built in co-operation with Irish company Dairygold, which already has an adjacent plant. It will produce the traditional Norwegian Jarlsberg cheese using Irish milk, with production planned to commence in 2019.

Dairygold and Tine already have a decade-long partnership, with Dairygold currently making Jarlsberg cheese for Tine. But the new investment will expand this production significantly: once completed it will produce up to 20,000 tonnes of Jarlsberg cheese annually for the international markets in the EU, US, Canada and Australia.

Tine is moving production of Jarlsberg to Ireland as a result of Norway phasing out export subsidies that the dairy firm currently relies on by 2020 – a requirement imposed on the country by the World Trade Organisation.

Tine’s CEO has previously said that without these subsidies, exports from Norway will no longer be profitable.

The dairy plant will be equipped mostly with processing equipment sourced in Europe, meaning the financing will support several European exporters, according to KfW Ipex-Bank.

“By supporting our esteemed business partner of many years Tine with its forward-looking international investment, we are contributing to enhancing the competitiveness of European companies in the global markets,” says Markus Scheer, a member of the bank’s management board, commenting on the deal.