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Plan to produce 20,000T land-based salmon in China

 UNDERCURRENT NEWS


Ex-Marine Harvest exec onboard plan to produce 20,000t with China RAS salmon farms

By Louis Harkell Dec. 18, 2017 14:18 GMT



Proposed land-based salmon farm facility 4.5 hours travel south of Shanghai, near Xiangshan City.


A Nordic firm with a former-Marine Harvest executive as chairman is planning to produce 20,000 metric tons of Atlantic salmon annually within five years from land-based salmon farms in China.


The project, which is backed by Chinese local government, will produce live and fresh salmon for 100 million Chinese consumers living within five hours driving distance of the first planned facility in Ningbo, east China.


€70m will be invested in the first land-based salmon farm using recirculated aquaculture systems (RAS), which will produce 3,000 to 4,000 metric tons of Atlantic salmon annually in the start-up phase.


According to Ove Nodland, majority owner of Nordic Aqua Partners, another two further sites identified could raise production to 20,000t within five years.


The project is being called Seafood Dragon.


Currently, nearly all fresh salmon in China is produced abroad and imported via airfreight.


“We avoid expensive airfreight cost, import duties and fees, and increase shelf time,” Nodland told Undercurrent News.


Now, the firm is seeking two assistant farm managers with “vast operational experience salmon farming in Northern Europe, primarily within RAS-based technology” to join the project, according to a live job advertisement.


They will join a foreign farm manager already onboard and chairman of Nordic Aqua, Ragnar Joensen. Joensen was formerly managing director of Marine Harvest's Norwegian operation then global technology manager at Marine Harvest.


Joensen, who is currently still a board member for Marine Harvest Faroes, told Undercurrent he is "excited" to be joining the project.


"This is an exciting project. We think RAS salmon farming can compliment net pen salmon farming nicely."


He added that he knows the technology well having helped design and build smolt production systems using similar setups.


“Joensen has an impressive record within the industry, and his main responsibility will be to assure best possible technical design and operational production planning and farming,” said Nodland. “I will be responsible for the Chinese factors of the project, Joensen will have the overall responsibility for the design, process and salmon farming.”


Altogether, Seafood Dragon aims to have three-five foreign managers onboard by the end of the second quarter of next year, Nodland said.


Financing is still yet to be finalized but Nodland is hopeful both financing rounds -- series A kicked off this summer and aimed to raise €3m and series B a further €27m -- will be completed by the first quarter of 2018.


“We are currently in discussions with interested investors in both [the] Nordics and China,” he said.


Construction is scheduled to begin in the second quarter of 2018, with the first hatchings in Q2 of 2019.


The teaser advertises the promise of being, to its knowledge, the “the first fully-integrated and commercially viable RAS Atlantic salmon farming facility in China based on state-of-the art technology, supplied by world-leading technology providers AKVA Group and Aquatec Solutions.”


“The concept includes all stages of production, from hatching of imported fish eggs to harvesting a fully grown Atlantic salmon,” it states.


A “very favorable” ten-year lease agreement provided by the local government with an option to extend another ten years -- covering land, facilities, roads, communications, power and water supplies, and treatment of treated waste water and nutrient effluents -- is valued at €23.4m, while export credit loans will add another €20.3m.


“Our intention is to have a holding outside of China, and a wholly foreign-owned entity in China. Our ongoing discussions with Chinese interests may change this structure into a joint venture,” said Nodland.


Nordic Aqua Partners is registered in Denmark, with Nodland -- a Norwegian -- a 50% shareholder.


There are presently only a handful of land-based salmon farms operating in the world, including one built in China in 2010 by Shandong Oriental Ocean, a Chinese company.


During the China Fisheries & Seafood Expo held in Qingdao, China, a spokeswoman for Shandong Oriental told Undercurrent the firm is currently not looking to expand land-based, RAS salmon farming.


100 million customers


Based on the farm’s planned location -- Gaotang Island, Ningbo, -- the firm will be able to deliver fresh salmon to the city of Xiangshan within 30 minutes. Reachable within five hours are cities Shanghai, Hangzhou, and Ningbo, which, in addition to the area surrounding the facility, are home to around 100m people, according to the teaser.


The initial plan is to produce head-on, gutted (HOG) salmon to markets and then expand into processing and branding, said Nodland.


“Financial estimates are based on direct sales of HOG to main customers, at attractive prices,” said Nodland. “Our plans do, of course, include processing and direct sales to end consumers, focusing on the rapid growth in the on-line market. We will be able to sell live or hours fresh salmon in any shape and formed preferred by the local market.”


According to the teaser, it is estimated the Seafood Dragon will be able to produce HOG salmon "significantly below" costs of imported salmon.


“The August Nasdaq salmon index price of NOK 58.44 + freight (NOK 12) + import duty and administration (10% and 1%), which adds up to €8.4/kg, is some €0.1/kg higher than budgeted sales prices of €8.3/kg. “


“In China, the market price for large customers is CNY 110/kg (€14) as of August, 2017, which is €5.7 above our budgeted sales price of €8.3,” states the teaser.


Nordic Aqua will also have license to import salmon for direct sale, and a license for processing imported salmon and its own salmon, said Nodland.


When asked whether Chinese prefer imported products -- and, therefore, will pay more for them -- Nodland said documented preference is for high quality products and guaranteed freshness irrespective of origin.


“We are focusing on securing quality, based on imported salmon eggs, imported salmon feed, imported technology and processes, managed and operated by an international and experienced management, with the full support of local authorities. We can guarantee and prove delivery of live and day fresh salmon, and this is what the Chinese consumers really are looking for.”


He added the project has been in the making for over four years.


“I have lived and work in China for 20 years, and still do. I started to get involved with this project four years ago, both because I have a network in the industry, and that my presence in China gave me a good insight in the huge potential in fish farming in general and Atlantic salmon in particular.”


https://www.undercurrentnews.com/2017/12/18/ex-marine-harvest-exec-onboard-plan-to-hit-20000t-with-china-ras-salmon-farms/