Strong growth, low feed factor and sustainable raw materials
The average weight of the smolt was 120 grammes when it was released. After only five months in the pool, at end-October, average weight had reached 1 kilo, well ahead of our late-December forecast. By the end of November the fish was 1,350 grammes on average. As we are now entering a winter period with colder water, we expect the growth rate to slow down somewhat. This is obviously part of our plans, which target first harvest in the middle of 2023.
The fish feed is another item that affects the growth of the fish and the biological conditions in the pool. In July this year, Andfjord Salmon entered into an agreement with Skretting Norge and Sortland-based Zooca® that facilitates the provision of a specifically designed salmon feed for Andfjord Salmon and a long-term co-operation to increase the utilisation of the zooplankton Calanus finmarchicus (Calanus) in salmon feed.
Our specially designed feed – Calanus Plus by Andfjord Salmon – has proven successful. The feed contains Calanus, which is the salmon’s natural ‘starter’ feed in the ocean. Calanus also acts as a flavour enhancer in the feed. This means that the fish can enjoy both a healthy, nutritious and tasteful feed.
It is also highly satisfactory to witness that our feed factor has been below 0.9 during the first half of the salmon’s production cycle at Kvalnes. Optimised feed ingredients in combination with our technology equal a feed waste close to zero.
Low energy consumption
Both the fish farming industry and stock market were undoubtedly watching our flow through technology closely. I am therefore very proud of the fact that we have been able to recreate the salmon’s natural habitat on land.
A major advantage of our flow through system is that we do not need to invest in costly equipment or use energy – with its associated costs – to lift, clean or manipulate the temperature of the seawater.
We have been able to convert our theoretical calculations to real life practice. In 2022, our average electricity consumption has been 80,000kW/h per month. This equals a run-rate of approximately 1kW/h to produce 1 kilo of salmon. This is industry-leading for land-based fish farming. The combination of modest energy use and costs underline the competitiveness of our flow through technology.
In February, Nutreco, a global leader in animal nutrition and aquafeed, and Norwegian seafood group Holmøy, became shareholders in Andfjord Salmon as part of a NOK 38 million private placement. A couple of months later, Portugal-based international food industry group Jerónimo Martins agreed to invest NOK 173.9 million in Andfjord Salmon through a directed private placement.
These investments significantly strengthened Andfjord Salmon’s balance sheet, which means that we are in a comfortable financial position for the phase we are currently in. However, just as important is the competence that these industrial investors bring to Andfjord Salmon. Holmøy is a fish farming expert, while Nutreco is one of the world’s leading players with salmon feed and associated biology. Jerónimo Martins has been involved with food production for 230 years and has extensive competence within food sale, marketing, logistics and distribution. Hopefully, we can tap into this knowledge when our salmon is ready to enter the market.
The road ahead
Our primary focus in 2022 has obviously been our first pool at Kvalnes. The first pool will house approximately 200,000 fish to an average harvest weight of between 4 and 5 kilograms. We expect first harvest mid-2023. We have a license for 10,000 tonnes MTB at Kvalnes, equivalent to an annual production volume of 19,000 tonnes HOG.
Phase 2 at Kvalnes are the pools that will be developed subsequent to the first pool. We have already carried out a lot of the groundwork for the next pools. We are currently in final discussions with several suppliers to conclude on the development plan for the next construction phase. It is important that we capitalise on the synergies and experiences from the first pool when we embark on the next pools.
Breivik and Fiskenes
We also have other sites at Andøya. The zonal plan application for our Breivik site was approved in June. According to what we have heard from the Andøy municipality, the Fiskenes zoning plan application will be on Andøy municipality council’s agenda in the New Year. We still experience strong support for our expansion plans, because of the positive ripple effects they have for value creation and employment here at Andøya.
Earlier this week, the Norwegian Ministry of Trade, Industry and Fisheries announced that it implements a temporary halt in license applications for land-based aquaculture. The temporary suspension will be effective until updated regulations for land-based fish farming are in place. The new regulations will, among other things, contain a clearer framework for what is considered ocean-based and land-based fish farming.
Andfjord Salmon is land-based, but we have on previous occasions requested that the authorities provide clarity and more up-to-date regulations that take into account the technology development within land-based fish farming. It is useful to bear in mind that RAS systems was the only relevant technology when the latest preparatory legislative work was conducted in 2015/2016, which later opened the door for land-based fish farming. Flow-through technology – with its much lower energy consumption – has since been developed. We are therefore pleased that we will now get these regulatory clarifications, which will provide a higher level of predictability for both fish farming companies and the authorities.
From a practical viewpoint, the temporary suspension of license applications does not affect our progress. We already have a production license at Kvalnes, which will be our main focus in the coming years. Further, we have deliberately held back the license applications for Breivik and Fiskenes in expectation of the new regulations.