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Farm closures 'could be final straw for Nova Austral'

A Nova Austral processing plant in Porvenir, in the Chilean half of the island of Tierra del Fuego. A lawyer representing the company has warned that the firm's existence is threatened if the revocation of three environmental licences isn't reversed. Photo: Salmonexpert.cl.
A Nova Austral processing plant in Porvenir, in the Chilean half of the island of Tierra del Fuego. A lawyer representing the company has warned that the firm's existence is threatened if the revocation of three environmental licences isn't reversed. Photo: Salmonexpert.cl.

Loss-making salmon farmer Nova Austral, which employs more than 800 people, may have to shut down if a forced closure of three salmon farms in Chile’s Alberto de Agostini National Park isn’t reversed, a lawyer acting for the company says.

Chile’s environment agency, the SMA, revoked the environmental permits for Nova Austral’s Aracena 10, Cockburn 14, and Cockburn 23 farms in early July for overproduction of fish by 25%, 15% and 30% respectively in periods between October 2015 and late 2017.

Nova Austral is appealing against the punishment, which is the toughest sanction the SMA can deliver. It is also appealing a fine of more than 900 million pesos (£820,000) imposed by the SMA for altering the seabed at another farm, Aracena 14.

An unsustainable situation

Lawyer Julio Recordón, on behalf of Nova Austral, said in written arguments to the Third Environmental Court that the sanctions would condemn the company “quite possibly to the closure of its operations in Chile, while the impossibility of operating three of its salmonid fattening centres will necessarily lead to an unsustainable adverse financial situation”.

This allegation supports one of the first arguments that Nova Austral maintains in its defence, and that is that the SMA did not consider the critical economic condition of the company when imposing the sanctioning measures, as was its obligation according to the law.

Year on year losses

Recordón explained that, during the course of the sanctioning procedure by the SMA, Nova Austral presented financial statements that show losses of more than US $81 million dollars in 2020, more than $54 m in 2021, and losses of $35.7 m for the first half of this year.

In addition, the company explained that debt had grown from $431 m in 2019 to $504 m at the end of 2021.

SMA ‘violated law’

“Consequently, the SMA has violated article 40 of the Organic Law of the SMA by adopting a decision that, in view of the company’s economic situation, makes its operational continuity impossible,” Nova Austral claims.

Nova Austral also argues that alleged environmental damage that the SMA said justified the most serious sanctions didn’t occur. It also questions the methodology applied by the SMA to measure the environmental damage and affirms that the location of the farms within a national park is not a sufficient circumstance to assume the existence of damage.

The company’s appeal also indicates that from the time in which the overproduction that gave rise to the sanctions would have been verified, there have been no subsequent breaches by Nova Austral that justify classifying it as a persistent offender, as the SMA has done.

Nullifying fine

In addition to restoration of environmental permits, Nova Austral is also asking the court to nullify the fine imposed by the SMA for altering the seabed of the Aracena 14 farm.

In contrast, Greenpeace believes the fine is an inadequate punishment and has asked the court to revoke the farm’s environmental permit instead.

Nova Austral is jointly owned by Fund 3 of northern European private equity firm Altor Equity Partners, and Bain Capital, an American private investment firm based in Boston.