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Fonterra shuts down in Sri Lanka after 'threats'

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Activists demonstrate against alleged contamination of milk powder outside Fonterra's Colombo factory on August 22, 2013. The New Zealand firm closed its doors Friday fearing for the safety of staff after receiving threats. (AFP)

New Zealand dairy giant Fonterra temporarily shut down its operations in Sri Lanka on Friday, saying it feared for the safety of staff amid allegations of product contamination.

The move was sparked in part by a protest outside one of its Sri Lankan factories on Thursday which attracted about 200 people, the company said.

Fonterra, centre of an unrelated botulism scare earlier this month which led to global recalls, said the shutdown was "to protect our people and farmers' assets".

"It is a precautionary measure to ensure our 755 people working there are safe," chief executive Theo Spierings said in a statement.

"We have closed our plants and office in Sri Lanka and have asked our people to stay at home."

He later told Radio New Zealand: "There have been threats around... to individuals and our facilities."

Sri Lankan courts on August 17 barred Fonterra from selling its products in the country over fears they were contaminated with the agricultural chemical dicyandiamide, or DCD.

The ban came after the nurses' trade union took action against the company.

Fonterra insists there is no contamination, saying tests carried out by the Sri Lankan government are inaccurate.

Spierings said emotions were running high and he wanted ensure the safety of his staff.

He did not indicate how long the shutdown would last.

"We are also working with Sri Lankan and New Zealand government authorities on a long-term sustainable solution for our Sri Lankan customers, communities and dairy sector," he said.

New Zealand exports to Sri Lanka are worth more than NZ$300 million ($235 million) a year, according to official data, mostly dairy products.

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