Mowi buys capacity in Norway as tax forces smaller player out of sea

Fish farming giant Mowi has agreed a deal to buy all of Torghatten Aqua AS’s salmon farming seawater business in northern Norway.

The purchase, which is subject to approval by the Norwegian competition authority, will give Mowi licences for an extra 2,628 tonnes maximum allowed biomass.

“We expect to harvest around 4,500 gutted weight tonnes annually from this licence portfolio,” Mowi said in a stock exchange announcement.

Torghatten Aqua is a salmon farming conglomerate in production area 8 in northern Norway that is engaged in several activities including renting out salmon licences and seawater sites (joint operation agreement with a third party). It is also involved with school activities, land-based salmon farming, and consulting.

Mowi became the owner of a 33.34% stake in Torghatten Aqua when it acquired Nova Sea last year.

'A very good match'

Under the new agreement, Mowi will buy 3.37 licences in total from Torghatten Aqua: 1.37 commercial licences, 1 exhibition licence, and 1 education licence.

“Torghatten’s seawater farming business is a very good match with Mowi Region North and will further strengthen Mowi’s leading presence in northern Norway. The transaction will strengthen Mowi’s position in an area known for its excellent biological performance which is already core to Mowi Region North, and it supports our long-term strategy to sustainably grow our harvest volumes in a cost competitive way,” said Mowi chief executive Ivan Vindheim.

As part of the transaction Mowi will return its 33.34% stake in Torghatten Aqua so that the company can develop its non-seawater operations on a standalone basis. Cash consideration on a net basis from Mowi to Torghatten Aqua is NOK 293 million (€26m / £22.6m), payable upon closing.

Resource rent tax

Frode Blakstad, acting chairman of Torghatten Aqua, said: “The reason why we are now choosing to sell is the effect that the resource rent tax has on the earnings of smaller fish farming companies, which only have activity in cage farming at sea.” The tax charges producers 25% of the value added to fish during their time in the sea, and is charged over and above corporation tax..

Blakstad believes that the resource rent tax favours large aquaculture players with activity throughout the value chain, such as Mowi, and makes it more difficult for smaller companies, such as Torghatten Aqua. 

“The resource rent tax leads to fewer and larger fish farming companies,” he said in a press release. 

Land-based from now on

Torghatten Aqua will in future concentrate on land-based farming, expertise and school initiatives, as well as restaurant and tourism initiatives at Toft in Brønnøy. 

“The agreement that has been entered into gives us the financial power to develop all areas of Torghatten Aqua,” said Blakstad.

“The transaction is particularly important in ensuring continued high pressure on our focus on land-based farming. We are currently the largest owner of the land-based farmer Bue Salmon in western Norway, and are working to realise billion-kroner investments in Vevelstad Settefisk and Nordland Settefisk (smolt facilities), where we have permits.

“At the same time, we are waiting for a permit for the large-scale project Helgeland Miljøfisk on Toftøya. We see great opportunities within land-based farming going forward. We are now well-equipped financially to seize these opportunities.”

Torghatten Aqua emphasises that both it and Mowi are committed to ensuring a good continuation of the exhibition activity at the Norwegian Aquaculture Center in Toft, and have entered into an agreement that ensures this.