Common sense will prevail in Canada, says Cermaq boss

Salmon farming heavyweight Cermaq believes Canada’s federal government will change course over the planned closure of open net pen farming in British Columbia by 2029, chief executive Steven Rafferty said today.

Rafferty was speaking after Cermaq announced that it had agreed a deal to buy Grieg Seafood’s fish farming operations in northern Norway, in Newfoundland, and in closure-threatened BC, for CAD 1.36 billion (NOK 10.2bn / £738m).

Cermaq already farms in the province, and like both Grieg and BC’s other major salmon farmer, Mowi, it is facing the prospect on its sites being closed down in under four years.

A bright future

Asked why Cermaq would buy more farms with such short tenures, Rafferty told Fish Farming Expert: “The situation hasn’t changed for us in Cermaq. We believe Canadian salmon aquaculture has a bright future.

“We understand the current legislation saying closure by 2029 but we believe common sense will prevail, and when we work with the government or our First Nations partners with both Cermaq and Grieg, we believe that the Canadian government will recognise the huge contribution that Canadian salmon can make – also on a global scale – and its importance to remote areas and the Canadian economy.

“We’re dealing with food supply and employment in very remote areas, and we believe there will be a change in strategy by the government over time.

“We’re showing commitment to the employees of both Cermaq and Grieg that we don’t think this is over.”

280,000 tonnes by 2027

The deal with Grieg, which is subject to approval from competition authorities, will boost Cermaq’s existing harvest volume of around 200,000 tonnes by another 50,000 tonnes, based on the volume Grieg is currently producing in the operations it is selling.

“The ambition by 2027 will be 280,000 tonnes, because there are under-utilised assets in the [Grieg] companies, so we can grow volume in the next few years to a much higher level,” said Rafferty, who added that more than two-thirds of that extra 30,000 tonnes would come from Norway.

Newfoundland and Labrador also offers significant growth potential for Cermaq. Grieg has exclusive rights to farm salmon in Placentia Bay in Canada’s easternmost province, and guided for 10,000 tonnes from the bay this year.

14 licences

The company has 14 farming licences for the bay that equate to a potential harvest of more than 20,000 tonnes - “between 20,000 and 30,000 tonnes, depending on how we use smolt strategy, etc.”, explained Rafferty. “You can stock bigger sites over time, but at the start-up you’ve got less allowable biomass to be produced.”

There are no more licences in the pipeline for Placentia Bay at the moment, but there’s potential to grow more fish, he said. Grieg Seafood had planned to eventually produce up to 45,000 tonnes of fish per year in the bay.

Grieg also has the rights to develop the Bays West aquaculture area, west of Placentia Bay, with a potential to produce an additional 20,000 tonnes of salmon. These rights will be passed on to Cermaq, but the company won’t be looking to develop that area immediately.

Post-smolt facility

Grieg has a hatchery and smolt facility at Marystown, but mothballed work on a post-smolt facility there due to a lack of cash.

“Once the deal is closed we’ll have a good dialogue with the management in Grieg to take a look at their plans and what’s possible with the smolt unit,” said Rafferty. “There’s no guarantee, but it’s most likely we’ll finish the smolt unit over time, to complete what was the original plan. Whether it’s our first priority depends on exactly what work still has to be done on it.”

Cermaq had hoped to expand into Atlantic Canada five years ago, but withdrew its interest in sites in Nova Scotia because it was unable to identify enough sites for the 20,000 tonnes of production it required to make such an operation viable.

Challenging but promising

Asked if he was pleased to now get a presence on the east of the country, Rafferty said: “Our belief is that there are not too many areas in global salmon farming that can grow.

“Iceland’s got a possibility, and we believe that the east coast of Canada is the other one that has the biggest possibility of growth. It can be a challenging farming environment, but with new technologies and post-smolt and combinations of things we believe it’s got a good future.

“It’s got more extreme water temperatures, lower in winter than most other countries, and so the fish don’t grow too well during the winter months. That’s the biggest challenge. Grieg had the vision to say ‘get the post-smolts’ because that can mitigate against having two winters at sea.”

Triploid salmon

A condition of Grieg’s licences for Placentia Bay is that the farmer must use sterile, triploid fish to prevent any risk of introgression with wild salmon if there’s an escape. Triploids, which have an extra set of chromosomes, have had problems in Norway, but Rafferty isn't worried about using the fish in Newfoundland.

“The operations have been quite successful for Grieg in Placentia Bay, so we’ve no fears,” said the CEO.

The deal to buy Grieg’s assets in Finnmark, Norway, and in Canada is expected to be completed in around three months. It will cement Mitsubishi-owned Cermaq’s place as the world’s third-largest Atlantic salmon farmer, behind Mowi and second-placed SalMar.

“But it’s not about size,” concluded Rafferty. “The key thing for us is making sure that all the employees of Grieg and Cermaq are happy to be part of this new combination. Our main focus over the next six months will be on people – and the fish, of course – but it’s happy people who are the ones that make successful salmon farming.”

Also read:

Grieg to sell Canadian and Finnmark assets to Cermaq for £738 million