Land-based yellowtail farmer The Kingfish Company sees the reaction to Atlantic Sapphire’s problems earlier this month as binary in its impact on the discussion of the recirculation aquaculture systems (RAS) sector, The Kingfish Company CEO Ohad Maiman told IntraFish.
The sector has already proven that it is working, and at this stage it is no longer a question of whether it will survive or not, Maiman said.
Towards the end of August, Atlantic Sapphire's share price fell drastically after the company reported major losses during the first half of the year and low oxygen supplies at its Florida facility.
The company later announced that operations at its Miami facility were back to normal but the quick succession of events created significant media scrutiny of the industry, and pulled down share prices of other RAS producers, including The Kingfish Company.
Year-to-date, shares of The Kingfish Company, which trades on the Euronext Growth exchange in Oslo, are down over 25 percent. Shares of Atlantic Sapphire, meanwhile, are down nearly 60 percent.
Collectively since the start of the year, the world's major land-based farmers, most of them listed on the Oslo Stock Exchange, have seen their market caps collapse by nearly $1 billion (€848 million).
The Kingfish Company has respect for what Atlantic Sapphire is doing, Maiman said, declining to comment further.
It is only natural that negative events make headlines in a young industry, Maiman said. He noted companies operating in mature sectors do not always produce solid reports every quarter.
Emerging production technologies in aquaculture are ripe for scale, which is demonstrated by serious investors' repeated investments, Maiman said.
Last week, investment groups Kverva and Ferd anchored a NOK 162 million ($18.7 million/€16 million) investment in Columbi Salmon, the first time the two funds have invested in land-based salmon production.
In addition, Kjell Inge Rokke’s Aker and SalMar invested in a joint offshore aquaculture company, with plans to scale the operation globally.
The Kingfish Company’s own growth strategies are also going according to plan, Maiman said. The company expects to more than double production capacity at its Netherlands facility to 3,000 metric tons in the second half of 2022.
Additionally, its wholly owned US subsidiary, Kingfish Maine, secured its final critical permit earlier this year, which paves the way for a 6,000-8,000-metric ton facility in the city of Jonesport, Maine.
Construction at the US site is expected to start later this year or early 2022.
On the lookout for other fish
As part of the company’s substantial scale-up, new fish species could be added to its portfolio, Maiman said.
He declined to comment on which species, noting the company's focus remains on yellowtail kingfish. RAS technology is capital intensive, so it makes sense to begin with a species that is high-value, import-dependent, and has proven to perform well in the systems, he added.
The Kingfish Company will also keep its focus on its current geographies of Europe and the United States, he said.
There is, however, scope to develop the land-based aquaculture sector in the Far East, and countries such as Japan and China have potential due to their high consumption and purchasing power. There could be basis for a solid business case if a RAS operation can produce local, high-value species that are otherwise imported, he suggested.
Still, the United States and Europe are The Kingfish Company's priorities due to their high purchase power and reliance on imports, he said.
Substantial scale-up planned
The company is halfway through its 10-year plan. It aims to be an early mover in the sector and has proven its program works well, as it produces above its design capacity, Maiman said.
The RAS sector is close to where the netpen sector was three decades ago, and the sector has now proven the technology is here to stay. In fact, RAS could account for a third of the total fish supply going forward, Maiman said.
The wild-catch supply has not increased much above 90 million metric ton since the '90s, and while traditional aquaculture has reached similar levels during the last 30 years, heightened environmental and regulatory pressure on this sector could see this number starting to plateau.
Assuming global demand continues to increase on the current trajectory, RAS could take on a significant portion of that growing need in the coming 30 years, Maiman projected.
