Plans for the plant were announced back in 2005, when the lactic acid and derivatives market was projected to continue growth of 10 per cent annually. At the time, the company said this was driven by the increasing attention on food safety, health and the environment. The importance of the new facilities became apparent last year, when the international ingredients company said it would switch all European lactic acid production to Thailand, the US and Brazil because of disappointing margins resulting from high production costs. "Purac Thailand strengthens Purac's position as the world's largest manufacturer of natural lactic acid, derivatives and lactides and has a central role within the PURAC manufacturing footprint," said the company. "It supports Purac's worldwide growth, including the fast growing Asia Pacific region, and supplies its derivatives plants." Lactic acid, a natural organic acid present in milk, meat, and beer, is used extensively by the food industry as a flavouring agent, preservative, and acidity adjuster in foods. Applications include improving dispersion and whipping properties in dry egg powder, cheese spreads and salad dressings. New location The new plant is located at Map Ta Phut, in the Rayong Province in eastern Thailand, close to Thailand's container port Laem Cha Bang. The Thai location gives Purac ample local supplies of sugar, the key raw material used to produce lactates and lactic acid. Thailand produced some 47.8m tons of sugar last year, of which Purac is likely to use about 170,000 for its needs. The new plant is partly funded with money from the sale of another factory in Ter Apelkanaal, the Netherlands. The company said the development and construction of the plant has been successful and completed within the scheduled time period. The expansion will provide the firm with a lactic acid capacity of 100,000 tons undiluted, and 15,000 tons for the sodium/potassium lactate. Lactic acid market While demand for lactic acid remains strong, with net turnover between 2003 and 2006 increasing from €257.5m ($398.9m) to €295m ($457), worryingly operating profit shrank from €50.1m ($77.6m) to €27.3m ($42.3m). Despite profits being down, Purac said the potential for market expansion is significant. The company has had to hike prices for lactic acid several times in the past few years in a bid to pass the rising cost of production on. While lactic acid production from China has increased competition, Purac said this was more at the expense of its competitors rather than for Purac. Export subsides out of China were lowered in July, the firm said. To combat competition Purac will "manage lactic acid production on an absolute lowest cost level", a goal it hopes to achieve with the help of the new Thai factory.