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"Aquaculture, not the Internet, represents the most promising investment opportunity of the 21st Century."

- Peter Drucker, Management Expert & Economist


Nordic Aquafarms says RAS offers a cheaper way to add salmon farming capacity

Investing in a RAS would be a cheaper way of buying salmon farming capacity than acquiring shares of Bakkafrost or Marine Harvest, Nordic Aquafarms CEO Erik Heim said.

Nordic Aquafarms, which is building a massive land-based salmon farming using recirculating aquaculture technology (RAS) in Maine, says it can match the operating costs of sea-pen farms without even taking into consideration transport costs.

That's where RAS has a big advantage over sea-pen farming, said Nordic Aquafarms CEO Erik Heim. A salmon farm in Maine only has to truck its salmon to a cold storage facility in major urban centers such as Boston or New York, costing only a fraction of the money required to send fish via air freight from farms in Chile and Norway, he claimed.

That makes RAS arguably more competitive than sea-pen farming, Heim said. Besides the farm planned for Belfast, Maine, Nordic Aquafarms plans a second phase of its Fredrikstad Seafoods operation, which would make the site Europe's largest land-based salmon farm. The first phase of the farm is scheduled to be commissioned later this year.

"If you buy shares in Marine Harvest or Bakkafrost you will be paying for a kilo of fish than if you are investing in this," Nordic Aquafarms CEO Erik Heim told Undercurrent News.

Marine Harvest's shares have more than doubled since 2014 to more than NOK 160 ($19.53) a share. Over that timeframe, harvest volumes have decreased from 418,873 metric tons in 2014 to 370,346t last year. Nordic Aquafarms is spending about $150 million to add 13,000t of salmon farming capacity at the first phase of its Maine farm scheduled for completion in 2020.

Nordic Aquafarms plans to build Maine capacity out to 33,000t in subsequent phases, requiring a total investment of up to $500m. The Belfast location, the site of a former water utility, was chosen because it has sufficient saltwater and freshwater sources to serve all expansion phases and close access to Highway 1, to ship salmon to the US Northeast Corridor.

Heim predicts that the salmon industry will need sea-pen, offshore and land-based farming to supply a global market with a fast-growing appetite for Atlantic salmon. Previous failures in RAS farming methods don't necessarily make land-based a riskier business than coastal farming, Heim said. The quality of individual projects on each of these production methods is as important as the method itself, he said.

Sea-pen farming requires costly infrastructure such as fuel-guzzling sea vessels, and RAS farms suffer fewer mortalities than coastal farms, Heim said.

This is an argument that Heim will ultimately make when Nordic Aquafarms seeks to diversify its shareholder base in a bid to expand operations globally although the company is well financed, for now, he said.

"Right now we have plenty of financial capability," Helm said. "It's just a matter of having more anchor investors to lean on as you start scaling big things."

Nordic Aquafarms plans to grow other species in RAS farms, adding to its yellowtail farm, Sashimi Royal, in Denmark.

Nordic Aquafarms said the main challenge in developing the Maine site is permitting and getting community acceptance in Belfast, a well-to-do town that still has an active shipbuilding industry. Part of the difficulty in getting that acceptance lies in explaining how RAS farming works, Heim said. The company hired David Noyes, who ran a RAS farming operation, as its chief technology officer, earlier this month.

 Source: Undercurrent News

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