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Atlantic Sapphire On Track for 2020

UNDERCURRENT NEWS

Atlantic Sapphire’s land-based salmon plant on track for 2020
By Jason Huffman Feb. 5, 2018 16:58 GMT

HOMESTEAD, Florida, US -- Large-track construction vehicles roll over white sand on 80 acres of property that until recently was used to grow tomatoes.

Everything has been progressing here in a way that should allow Atlantic Sapphire to open what would be the US' first operational, large-scale commercial salmon farm and deliver an initial harvest of 800 metric tons by mid-2020 as planned, Johan Andreassen, the founder and CEO, assured a small group of investors during a tour late last month.

The plant's location, on the southern end of Florida, about 34 miles west of Miami, will enjoy a big advantage, he said.

While salmon produced by competitors with more traditional sea-based farms in Chile are still in the air, flying to Miami International Airport, where they will then be loaded into trucks for the next leg of their trip, Atlantic Sapphire’s product, head-on and gutted, will already be on the road or at its final destination.


The water filtration system going in at Atlantic Sapphire's land-based acquaculture facility near Miami, Florida. Photo by Jason Huffman.

“We’ll be able to harvest here in Miami on a Monday and deliver to New York on a Tuesday without using an airplane,” he said, noting the longer shelf life this gives his fish.

Nordic Aquafarms, a  Fredrikstad, Ostfold, Norway-based company, made big news in the aquaculture world last week when it announced its plans to build a 40-acre land-based salmon plant on the coast of Maine. Construction on the facility, which has a goal of ultimately producing 33,000 metric tons of salmon annually, is set to begin sometime in 2019.

But Nordic will be playing catch up with Atlantic Sapphire, which has a considerable head start and an even grander, long-term goal.   

None of the walls have gone up around the 380,000-square-foot building that ultimately will hold Atlantic Sapphire's new recirculating aquaculture system (RAS) and its offices to be contained upstairs. The management team is working out of a temporary trailer. But some of the facility’s 62 miles of pipes are in the ground and giant water filtration screens are being lifted into place.

The drilling of wells for both freshwater and saltwater is well underway, as is the creation of an injection well that will reach 3,000 or more feet down into the boulder zone to deposit the plant’s wastewater. The permits for all three have been acquired, accomplishing one of the project’s lengthiest and most critical steps.

Atlantic Sapphire has permission to pump, on a daily basis, 540,000 gallons of freshwater -- to be used in the hatching, smolt and pre-smolt tanks -- and 15 million gallons of saltwater -- to be used in grow-out tanks, Eric Meyer, the operations director, told Undercurrent.

“You have to have water and a way to get rid of your water,” Meyer said. “And we’re far along in our schedule on that.”

Eric Meyer, Atlantic Sapphire's operations director, explains his company's plans for accessing water and removing waste to a group of investors. Photo by Jason Huffman.

By October of this year, Meyer said, Atlantic Sapphire will have the incubation part of its plant completed and eggs will have arrived from a company in Iceland.

Florida was picked by Atlantic Sapphire from a list of 13 states under consideration largely because of the water resources available, Andreassen told Undercurrent. The business ultimately will bring Homestead, a community with a population of 68,000, at least 80 new jobs.

Today Atlantic Sapphire employs 15 in Florida, not counting the 60 to 80 construction workers who are here, working for a contracted firm, on a daily basis.

“People think that once you figure out the secret sauce of land base, you can do it all over the place, but I don’t agree," he said. "Land-based requires certain given relationships and scale, and that’s why I think certain areas are better than others. South Florida is the best area because of its unique aquifer, water relationship.’

Counting on Americans to eat salmon like Germans

It's not just the speed at which Atlantic Sapphire can get its fresh salmon to market that will give it an advantage.

It'll take the Florida plant 22 months to raise a fish to its desired four-to-five kilo size. By contrast, the salmon raised in the cold waters of Norway or southern Chile take 28 to 36 months, Andreassen said.

To complete the first phase of its construction, Atlantic Sapphire still needs to install 36 grow-out tanks, each of which will contain some 500,000 gallons of water and 40,000 to 50,000 fish. The water will come into the plant from aquifers at 79 degrees Fahrenheit and have to be reduced to 55 degrees, so a coolant system is needed, too.

At maximum capacity, the first set of tanks will allow the plant to deliver 10,000t of salmon per year. But, if all goes well, Atlantic Sapphire will add more structures, growing capacity to 30,000t per year by 2022 and 90,000t by 2026 -- almost three times the goal set by Nordic Aquafarms.


Atlantic Sapphire's expansion plans from a presentation given in London in November.

For now much of the land purchased by the company is being leased back to the original owner to continue growing tomatoes and other produce common to Florida. But given the future market demand that Andreassen projects, it's likely that Homestead will one day soon be just as well known for its salmon production.

The US consumes nearly 500,000 lbs of salmon each year – the most in the world -- and that number has been growing by 9% annually, on average, the company noted in a presentation recently given to prospective investors in London, quoting data from the Norwegian Seafood Council. Meanwhile, the per capita consumption rate in the US is only 2.9 lbs, while Germans, for example, eat salmon at a rate of 4.2 lbs per capita.


If US consumers ate as much salmon as Germans, it would translate to a 49% increase in demand. A slide from Atlantic Sapphire's recent investor presentation in London.

Just getting Americans to match the rate of consumption enjoyed by the Germans would increase salmon sales in the US by 49%, the presentation suggested.

It’s been just the right note to hit with investors. Atlantic Sapphire has raised about $80m in equity from 150 shareholders on the Oslo, Norway, stock exchange, while borrowing $62.5m, and Andreassen told Undercurrent that he plans to raise another $60m in capital this year to fully fund the company.

'The most efficient way of using farmland'

Other more conventional sea-based producers of salmon rolled their eyes when apprised by Undercurrent of Atlantic Sapphire’s plans to shake up their industry,

“Salmon farming already has a successful business model,” one producer with operations in Chile said. “Why reinvent the wheel?”

Johan Andreassen, CEO of Atlantic Sapphire, standing on the property where he hopes to one day expand a land-based salmon aquaculture facility. Photo by Jason Huffman

But Andreassen, a Norwegian-born former commercial fisherman and 20-year veteran of the salmon industry, asserts that what he is attempting is not an untested approach.

Rather that might have been a more apt description of the effort undertaken by Langsand Laks, in Hvide Sande, Denmark, in 2011. When that facility was completed almost seven years ago, it was the world's first commercial salmon "bluehouse", the play-on greenhouse term used by Andreassen and others to describe land-based aquaculture.

Atlantic Sapphire was one of a group of companies to invest in Langsand Laks but it later bought the others out.

The Danish operation is now delivering about 800t of fish per year, roughly 40% to 50% of which is sent to the US, and is expected to complete an expansion in May that will enable it to reach its maximum permitted output of 3,000t per year, Andreassen told Undercurrent.

Langsand Laks' product has its fans among some American chefs, as it possesses a milder, less fishy taste than that of salmon raised in the ocean. Andreassen said it also has a somewhat firmer texture, like wild-caught sockeye, as the plant applies water pressure against the salmon to recreate the effect of swimming upstream.

Atlantic Sapphire RAS farmed salmonA few other land-based salmon farms exist around the world, including Danish Salmon, in Hirtshals, Denmark, and Kuterra, in British Columbia, Canada.

Jurassic Salmon, a land-based farm that opened in West Pomerania, Poland, in June 2015, says on its website that it is “delivering 22t [of salmon] per week", or 1,232t per year, and was reported to have a deal with Marine Harvest to supply it with 1,000t of product annually. The company says it took its name from the more than 150m year old, uncontaminated geothermal water it sources.

There are a few land-based salmon farms in the US and more in the works, too, like Nordic Aquafarms, though Atlantic Sapphire looks to be the first that will be ready to produce such large-scale commercial volumes.

The Freshwater Institute, a research organization sponsored by the Conservation Fund, has been raising salmon on land in Shepherdstown, West Virginia, for the past seven years as part of an effort to advance the practice, frequently selling its small 20,000 to 40,000 lb annual harvest to a Maryland dealer. The fish have, at least on one occasion, made their way to locations owned by the US grocery chain Wegmans.

The organization regularly offers seminars about land-based aquaculture and saw 165 people show up at a recent training event in British Columbia, Canada, said director Joe Hankins. 

"It's not a zero-sum game," Hankins said. "Every fish grown in a tank on land doesn't mean one less fish grown in a net pen. This is about growing more seafood and providing better nutrition. It's not a competition."

Land-based salmon farms have yet a third advantage over sea-based farms in that conservation groups have deemed them better for the environment. The Freshwater Institute, Kuterra and Atlantic Sapphire were all awarded “best choice” or “green” ratings by the influential Monterey Bay Aquarium’s Seafood Watch program in October 2014.


Any hole dug on the construction site of Atlantic Sapphire's future salmon farm quickly fills with water thanks to the area's high water table. Photo by Jason Huffman.

Also, unlike salmon farms off the coasts of Washington state and British Columbia, the Atlantic salmon being grown by Atlantic Sapphire won’t antagonize First Nation and advocacy groups concerned about them escaping and contaminating any wild-caught species.

Andreassen said his plant is 15 miles from the closest ocean shore. Salmon can't survive in temperatures greater than 68 degrees F, and 72 degrees F is the coldest water gets in the Atlantic near the southern end of Florida, he added.

His property borders the Everglades, a 1.5m-acre area of wetlands that's often been compared to a slow-moving river, requiring the company's local head of security to keep an eye out for alligators and pythons.

One investor visiting the plant from Norway said he was in the oil and gas business but learned about the Atlantic Sapphire operation at a child's birthday party. It was initially a challenge to put money in a type of salmon that was not being caught or raised in a place as picturesque as his home country, surrounded by fjords and glaciers, he said.

But the investor, who requested anonymity, said he ultimately was drawn in by the cleanliness of the contained water system and its relatively small carbon footprint as a supplier of protein. He takes pride in the company being of Norwegian origin.

A diagram from Atlantic Sapphire's presentation to investors, in London, makes the point about its ability to serve salmon to US consumers much faster and with less of a carbon footprint.

“Norwegians like new things,” he said. “We really believe in being pioneers in business. And we know a lot about salmon.”

Andreassen boasts that his Homestead operation will produce about 1,000t of protein per acre per year, a better rate than those offered by cattle, poultry or swine farms.

“It is the most efficient way of using farmland,” he told Undercurrent.

What could go wrong?
Though the land-based salmon industry may not be entirely new, it still experiences the occasional growing pain.


White sand covers the area where Atlantic Sapphire's hatchery will be installed. Photo by Jason Huffman.

Atlantic Sapphire's Denmark operation, in July 2017, reported "unexpected mortalities" of more than 550,000 fish, a quarter of its budgeted harvest. The company later determined the fish were exposed to high levels of hydrogen sulfide, a condition that can be caused in sea water by decomposing fish or other organic materials, such as sludge, when oxygen levels are low.

“We have taken several measures to prevent that from being a problem in the future which includes design changes, sensors and adjusted operational procedures,” Andreassen told Undercurrent. “In addition to that, as a general measure to reduce any risk, we are designing our future expansions with multiple independent water systems."

In phase one of its construction, Atlantic Sapphire's Florida plant will have six independent grow-out systems and seven independent fresh-water systems, he noted.

Having contained, independent tanks is also a good guard against the biggest problem experienced at sea-based farms: sea lice. The parasite has previously decimated both Norwegian and Chilean stocks and can make fish more susceptible to other diseases.

Another concern that Andreassen has guarded against is sabotage. He's hired a full-time security force which is maintained 24 hours per day, seven days per week around the plant.

But his plant can only do so much to guard against mother nature.

Florida has seen 79 tropical or subtropical cyclones since 2000, and Homestead is famous as the location that experienced one of the state’s most devastating storms, Hurricane Andrew. After causing major damage in the Bahamas and Louisiana, Andrew, in 1992, hit Homestead with Category 5-force winds – 165 miles per hour – killed 65, took power away from 1.4m, and damaged or destroyed 164,000 homes in Miami-Dade County.

Homestead, Florida, in 1992, after Hurricane Andrew rolled through. Photo courtesy of the National Oceanic and Atmospheric Administration.

Hurricane Irma was a Category 4 when it hit Florida's Monroe County, south of Homestead, in September with wind gusts of 150 to 160 mph. It knocked out power across the state and caused 6.5m people to evacuate their homes, including Andreassen. 

Many in the Miami-area seafood business recount the event as one that cost them significant sales, due in part to the airport being shutdown for days.

Atlantic Sapphire’s plant will maintain backup generators and enough fuel to keep operations going for six days in the event of a bad storm, Andreassen told Undercurrent. Its roofs will be able to absorb the direct hit of a Category 2 storm (96-110 mph).

"Make salmon farming great again" is what Atlantic Sapphire hopes to do at its new land-based plant near Miami, Florida. Photo by Jason Huffman.

He said he has insurance to cover hurricane damage, but couldn't reveal the details of his plan.

Regardless, Andreassen remains confident in the future success of his new Florida plant.

"Its not a question if this is going to work or not," he said in an email after Undercurrent's visit. "It will work. The question is, as always, 'How well will we be able to manage the farm to get the best possible biological performance?' That’s why why have a world class team that I am confident will manage to operate the bluehouse in the best possible way so we can provide Americans with healthy locally produced salmon with excellent flavor."


Contact the author jason.huffman@undercurrentnews.com