By Naomi Tajitsu and Megha Rajagopalan
WELLINGTON/BEIJING (Reuters) - New Zealand's Fonterra, the world's biggest dairy exporter, caught up in a contamination scandal this month, said on Thursday it was also forced to withdraw 42 tons of milk powder bound for China because of high nitrite levels.
Dairy products account for about a quarter of New Zealand's export earnings, and China is its biggest buyer of milk powder.
The high nitrite levels were first brought up by the official China Daily in late July and have dealt another blow to the company after it announced this month that it had found bacteria that could cause food poisoning in some products.
Fonterra had to apologize for a milk powder contamination scare in China after contaminated whey protein concentrate had been sold to China, Malaysia, Vietnam, Thailand and Saudi Arabia, and used in products including infant milk powder and sports drinks.
The company said on Thursday a shipment of powder had also been halted at the Chinese border in May after tests showed nitrite levels higher than allowed in China, although it had been approved for export after testing in New Zealand.
Nitrites occur naturally in water, soil and food and can be used as fertilizers and preservatives. Excessively high levels can be toxic.
Fonterra's group director of food safety and quality, Ian Palliser, said the milk powder showed nitrite levels of between 1.4 parts per million and 1.8 ppm when it was shipped from New Zealand, but showed higher levels in Chinese tests.
"The limit is 2 parts per million in China and the product tested at somewhere between 2.4 ppm and 2.8 ppm," Palliser told Radio New Zealand.
He added that China had a much lower threshold for nitrite levels than New Zealand, where levels of up to 5 ppm are considered safe for domestic consumption. The levels were "not a food safety issue whatsoever", Palliser said.
"The levels were below the New Zealand standards. This product could have been sold safely in New Zealand."
Fonterra said it had been in full control of the affected product and none of it had reached the retail supply chain.
Wellington has voiced frustrations over Fonterra's foot dragging in disclosing the contamination issue, and during a visit to China on Thursday, Foreign Minister Murray McCully sought to distance the country from Fonterra's woes.
"Fonterra has some work ahead of it in rebuilding Chinese consumer confidence," he told reporters in Beijing after meetings with State Councilor Yang Jiechi and Foreign Minister Wang Yi.
"We expect from our exporters that there should not be any mistakes ... When Fonterra disappoints customers, they also disappoint New Zealand."
Yang, in meetings with McCully, urged New Zealand to improve food safety, Chinese state media reported.
"We hope the New Zealand side will appropriately handle food safety issues, including the safety of dairy products, exported to China, and substantially ensure Chinese consumers' interests," Yang said, according to official newswire Xinhua.
Fonterra's much smaller competitor, Westland Milk Products, had export certificates revoked this week for a small quantity of the protein lactoferrin because unacceptable levels of nitrates were discovered in four consignments.
(Editing by Nick Macfie and Clarence Fernandez)