Extra funding needed for land-based salmon farm in China
Nordic Aqua Partners seeks £18m after 'off-flavour' problem in RAS
China land-based salmon farmer Nordic Aqua Partners is to raise an extra NOK 250 million (€21.3m / £18m) following problems in July with geosmin, a naturally occurring compound that can give fish an “off” taste.
The money will cover Oslo-headquartered Nordic Aqua's capital expenditure requirements and compensate for a reduced harvest in the second half of this year due to the time that work to solve the geosmin problem will take.
The company said all primary insiders that are large shareholders and have access to this information (Kontrari AS, AKVA group AS, Aino AS and Maringto AS) are supportive and have all indicated that they will contribute to funding needs.
Purging system overloaded
The incident in July prompted an immediate study of the root causes of the problem as well as implementation of mitigating efforts. One of the reasons for high levels of geosmin in fish was related to overloading of the purging system with high biomass.
High levels of geosmin were also detected in the production units and the company is focusing on lowering those levels before fish are transferred into the purging unit. Since the end of July, Nordic Aqua Partners has had protein skimmers working to reduce the levels of geosmin components before purging. The skimmers will gradually increase their capacity over the next three months, to take down geosmin level.
The company has also decided to increase the ozonation capacity in its recirculating aquaculture system (RAS) facility in Ningbo, south of Shanghai. Initiatives are also being taken related to operating protocols for the biofilters to reduce the production of geosmin in the system. The suite of measures will cost around €2m.
1.9% mortality
Nordic Aqua Partners began harvesting fish commercially in April and had been ramping up production week by week. By the end of June, it had harvested 523 tonnes of fish with an average harvested weight of 4.54 kilos (head on gutted) and a low mortality rate of 1.9% from 150 grams to first harvest.
Total sales for the second quarter of 2024 amounted to €4.7m, resulting in an average sales price of €8.94 per kilo. Farming cost was €5.23/kg.
Due to the initiatives taken to combat geosmin, the harvest plan for the second half of the year had to be adjusted to a significantly lower level. The company does not expect to have any harvest in Q3 2024 and 400 to 600 tonnes in Q4 2024. New harvest guidance for 2024 will be 900 to 1,100 tonnes.
Nordic Aqua Partners expects to be able to move a part of the biomass scheduled for harvesting in H2 to H1 2025. The harvest for next year is estimated to be in the range of 4,500 to 5,000 tonnes.
Had a good start
Chief executive Ragnar Joensen said: “I am pleased that our pioneering business got off to a good start. In the first operational quarter of our start-up year, we increased sales month-by-month and produced Atlantic salmon at a superior rate of 99%.
“Unfortunately, we were unable to follow up on this development at the start of the third quarter, and we must make certain adjustments in production to making us more robust in the future.”
Referring to the problem with geosmin, Joensen said: “We are monitoring the situation closely and we have a good understanding of what we need to do. However, effects from actions taken will take somewhat longer than previously anticipated and will thus affect production and limit production in the third quarter. However, we see no need to change the production plan for 2025.”
