Christmas greetings from Andfjord Salmon

Dear Andfjord Salmon shareholders, friends, business partners and neighbours: Here’s a Christmas greeting from Andfjord Salmon and a summary of what has been a highlight-packed year.

We at Andfjord Salmon prefer to look ahead, but sometimes it is healthy to take a break to reflect over choices that have been made and their consequences. 

As mentioned above, 2022 has been a year with many highlights. However, they have not appeared out of nothing. The highlights are the consequences of choices Andfjord Salmon has made since Roy Pettersen founded the company in 2014 until the daily operational poolside decisions we make today. The common denominator is that we have always been faithful to our concept: We want to develop the most sustainable and fish-friendly farming facility as possible, capitalising on the natural advantages we have at Andøya. 

The Gulf Stream on land, without and with salmon

Approximately one year ago, we were proud to announce the successful verification of our laminar water flow technology

During the first half of 2022, we operated the first pool at Kvalnes as if we had fish in it. This allowed us to be well prepared, from both a technical and organisational view, in advance of the first release of smolt. 

In parallel with our pool testing and preparations for smolt release, the smolt grew and became ready to be released into our first pool. 

On Saturday 25 June, D-Day arrived. Release of 200,000 smolt was successfully executed. The smolt quickly adapted to its new surroundings, with plenty of space and continuous supply of fresh, new seawater. 

The high survival rate since smolt release has been a major proof of concept. In ocean-based fish farming a mortality rate below three percent during the first three months is considered a success. After three months in Andfjord Salmon’s pool, we had a fish mortality rate of 0.7 percent. Or as we prefer to put it: A survival rate of 99.3 percent. 

The high survival rate was maintained throughout the autumn. By the end of November, it was 98.7 percent. This proves that the fish is not exposed to unnecessary stress factors, and that the spacious pool allows them to display a natural, healthy behaviour.  

The first salmon, produced by Andfjord Salmon.

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.  

Industrial investors

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. 

Martin Rasmussen and Chef Øyvind Bøe Dalelv. Photo: Andfjord Salmon.

A solid year

In 2022, Andfjord Salmon has proven that we can produce fish on land, with very low energy costs and without negatively affecting the environment. 

Our salmon grows faster than expected, which confirms strong biological conditions and that the fish thrives in the pool. That is why we state that we have succeeded in creating the salmon’s natural habitat on land. In addition, the salmon tastes fantastic, which one of the world’s best chefs has helped confirm. 

In summary, things could not have been better. We are very satisfied with our current position, but we will of course maintain our continued focus on building the world’s most fish-friendly and sustainable fish farming facility at Andøya. 

We have a lot of exciting milestones in the New Year, and we look forward to sharing updates about this. In the meantime, I would like to wish you and your family a merry Christmas and a happy, land-based New Year. 

Christmas greetings from,

Martin Rasmussen

CEO, Andfjord Salmon

Andfjord Salmon is a Norwegian company established in 2014. The company is listed at Oslo Stock Exchange (ANDF), and located at Kvalnes on the northernmost island of Andøya in Vesteraalen, Norway.