It will enable the Chinese-owned company to produce 20,000 tonnes of infant and adult formula, using powdered milk.
When full production at the plant starts in coming months, the number of employees will increase from 24 to 60.
Stage two is expected to involve a new A$50m (US$37.6m) factory to convert milk into powder, with work expected to start in the next few months. The second phase will create an additional 90 jobs.
Investment Attraction South Australia (IASA) helped the company with the planning and development processes, access training subsidies, and worked with the Dairy Authority of South Australia on licensing and accreditation for the production of infant formula.
Wang Xin Xiang, managing director of Blue Lake Dairy Group said the company appreciated the assistance of the State Government in providing guidance regarding the approval processes for the powdered milk converting facility.
Wang said the company was looking forward to continuing its investment in South Australia.