GRIEG SEAFOOD MAKES MAJOR CANADIAN ACQUISITION
The Newfoundland project includes exclusivity for salmon farming in Placentia Bay, which has a farmable area bigger than the Faroe Islands.
The project currently comprises licenses for 11 sea sites. 3 licenses are approved, 3 are expected to be approved in 2020 and the rest are in different stages of application. The project also includes a high-end Recirculating Aquaculture System (RAS) facility under construction.
The project has a long-term annual harvest potential of 30 000 – 45 000 tonnes Atlantic salmon.
Grieg Seafood has an ambitious strategy for long-term sustainable growth and development. By 2025, the company aims to harvest at least 150 000 tonnes of Atlantic salmon, to achieve cost leadership and to re-position itself in the value chain from a pure commodity supplier to a customer innovation partner.
Growth will be achieved through post-smolt investments, M&A activity and organic growth. Value chain repositioning will be achieved through increased presence in the market with partnerships, category development and brand cultivation. The acquisition of Grieg Newfoundland AS strongly underpins the 2025 strategy. The first harvest will be in 2022/23, and the region is expected to contribute 15 000 tonnes annual harvest by 2025.
Commenting on the acquisition, Grieg Seafood CEO, Andreas Kvame, says:
“For the past few years, we have focused on utilizing our existing licenses with success. This year, we will reach our target of 100 000 tonnes. Now we are ready for the next step on our growth journey. By developing salmon farming operations in Newfoundland, using cutting-edge technologies at all stages of the production process, we are strengthening our position as a global leader in sustainable salmon farming.
The US market is the world’s largest and fastest growing market for Atlantic salmon, but only a third of US demand is currently met by North American production. We already have a position in this market through our operations in British Columbia, where we have attained significant sales and marketing experience. With close proximity to important markets on the East Coast of the US, this acquisition significantly strengthens our US market exposure and opens up for synergies with existing operations.”
A brief history of the Newfoundland project
- The Newfoundland project was initiated by Grieg Kapital AS and Per Grieg Jr. in collaboration with their local partner Ocean Choice International Ltd. in 2014. Grieg Kapital AS is owned by the majority owner of Grieg Seafood ASA, the Grieg Group. Per Grieg Jr. is Chairman of the Board of Grieg Seafood ASA.
- In 2015, a memorandum of understanding (MOU) to produce Atlantic salmon on seawater grow-out sites across four areas of Placentia Bay was signed with the Province of Newfoundland. 11 licenses for sites are currently approved or in different stages of application.
- The Newfoundland project received Environmental Impact Study (EIS) approval in August 2018 for Placentia Bay.
- The Newfoundland project also comprises a high-end Recirculating Aquaculture System (RAS) facility. Construction of the onshore smolt-facility commenced in April 2019.
Specific conditions of the Newfoundland p
- e Newfoundland project includes long-term exclusive farming rights to the Placentia Bay area.
- The marine sites are in an area with favourable biological conditions for salmon farming.
- Temperature profile is similar to the Grieg Seafood’s Norwegian operations. Fluctuating temperatures in the water can occur in Newfoundland, with low temperatures in the winters and a recent incident of high summer temperatures in another part of the island.
- The area is highly isolated from other salmon farmers in the region. Long distances and low interconnectivity between sites lower risk of biological contamination between sites.
- Licenses require sterile salmon.
Equipment plan for the Newfoundland project
- The sites are exposed to high seas and all sites will be equipped with state-of-the-art technology and systems for harsh environments.
- 40-meter-deep pens and underwater feeding will reduce risk related to super-chilled or potential warm water.
- Grieg Seafood’s post-smolt strategy will be implemented in the region, increasing robustness of the fish at all stages in the sea and reducing time in the sea to potentially comprise only one winter.
- The fresh water RAS facility is planned to include a hatchery, a smolt facility and three post-smolt modules with potential annual capacity of 7 000 tonnes upon completion.
A stepwise approach to ensure risk management
The Newfoundland region will be developed gradually. Grieg Seafood will follow a stepwise approach to increased production and planned investments will be subject to frequent review and evaluation to ensure the viability and sustainability of growth and production. Grieg Seafood expects cost potential similar to its Norwegian operations and will leverage long experience producing in cold water. It also expects investment per kg to be similar to new sites in its Norwegian operations.
Production plan for the Newfoundland project
- The first phase has an annual harvest volume target of 15 000 tonnes to be reached by 2025. First harvest in 2022/2023.
- The second phase has an annual harvest volume target of up to 33 000 tonnes.
- The long-term harvest potential in Placentia Bay of 45 000 tonnes will depend upon prudent risk management, approvals according to EIS plan and sustainable and profitable production.
- On harvesting and processing, Grieg Seafood will collaborate with their local partner Ocean Choice International Ltd.
“Grieg Seafood has close to 30 years of experience with fresh water, post-smolt and sea water production of Atlantic salmon. Going forward, we will increase our focus on sustainability, fish welfare, reduction of carbon emissions and responsible farming practices. We will bring our best expertise, technology and knowledge into the development of the Newfoundland region, to ensure that we create value for all of our stakeholders alike: investors, customers, employees and not least for the local communities in Newfoundland,” says CEO Andreas Kvame.
Also commenting on the transaction, Stig Grimsgaard Andersen, Chairman of the Board of Grieg Kapital AS, says:
“Over the last few years, we have been able to make significant progress in the planning and development of this project and in 2019 we started construction of an advanced RAS facility at Marystown Marine Industrial Park, close to Placentia Bay. At this stage, we are fast approaching the initial smolt and seawater production phase. We are therefore glad to hand the reigns over to an organization with exceptional operational experience, financial capacity and scale to take full advantage of this opportunity. Our confidence in the viability and potential of this project is even further strengthened with Grieg Seafood at the helm and we are very happy to retain exposure to- and participation in this project through our continued ownership in Grieg Seafood ASA.”