The Hunan-based dairy company forced to recall 31 tonnes of infant milk powder in July because of contamination concerns has closed the plant that produced the product.
Ava Dairy insisted that cost - not safety - concerns were behind its decision to shut the facility in the Chengbu Miao autonomous county, which is believed to have been the source of the potentially cancer-causing aflatoxin found in five batches of the company's Nanshan Bywise baby formula.
The company said in a statement posted on its website on Thursday that the plant used a "wet-processing" technology that made it harder to prevent such contamination. Ava Dairy's milk powders will now be produced by the company's one-year-old Changsha factory, which uses "dry processing".
"Compared with wet processing, in the dry processing it's easier to control the products' quality," the company said. "What's more, with this method we will have more convenience in processing milk powder with raw milk purchased from both home and abroad."
Alfatoxins, which can cause liver cancer and disease, are naturally occurring chemicals produced by fungus and often found on spoiled food. The company said the contamination resulted from mouldy food fed to its production cows.
The Administration of Industry and Commerce of Guangzhou discovered the contamination during a regular safety inspection in July. Hunan authorities and the General Administration of Quality Supervision, Inspection and Quarantine ordered the company to recall the product and suspend production at the plant.
Last month, the Hunan Administration of Quality and Technology Supervision said on its website that it had revoked Ava Dairy's licence to operate the plant upon request from the company.
Ava has a third manufacturing centre in Hulunbuir, Inner Mongolia .
The mainland's dairy industry has been plagued by a series of safety scandals over the past few years. The most serious incident involved formula tainted with the industrial additive melamine, which killed six children in 2008 and made 300,000 ill.