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"Aquaculture, not the Internet, represents the most promising investment opportunity of the 21st Century."

- Peter Drucker, Management Expert & Economist

2018-06-29

US land-based salmon producer: Cost to be 'on par' with traditional netpen farming

Wyoming-based Aquabanq is planning to construct an industrial-scale recirculation aquaculture system (RAS) facility for Atlantic salmon farming in the United States.

Once operational, the company predicts its production cost will be "on par" with traditional cage farming operators. 'The recipe is simple,' according to executive AJ Shapiro, president and CEO of Aquabanq.A bulletproof, scalable technology with reduced operating cost and not doing business in jurisdictions hostile or indifferent to business in general and aquaculture in particular.

Aquabanq will use "field-tested" technology by Veolia Water Technologies and its aquaculture subsidiary Krüger Kaldnes, which will also guarantee the performance of the grow-out units.

The tech was designed to allow a "swift and dramatic" expansion of production capacity,
Shapiro said, without taking unnecessary technological risks.

I am very fortunate to work with a great team of professionals from Denmark and Germany with combined 50+ years of experience in aquaculture and RAS management. That said, when I look at the factor-based revenue or production cost distribution, there are two issues that I'd prioritize - power consumption and feed cost. And I believe the overall efficiency is where our system really shines.

Aquabanq, which is owned by UK Aquaculture Management and Holding, is planning a 5,000-metric ton of head-on/gutted Atlantic salmon by 2022.

In addition, it will build another five RAS units to scale up production to 10,000 metric tons by 2025.

Construction yet has to start, but we did get past the planning stage. I'd like to think about the current stage as the implementation stage.

Shapiro declined to share the investment per production unit but said the total project cost is at around $130 million (€111.4 million).

Under the existing scenario, once up to capacity in the third year, the business will be consistently generating a return on sales in excess of 40 percent and an operating cash conversion between 90-100 percent. The internal rate of return (IRR) on the investment would reach 30 percent - best in class according to DNB.

Shapiro said the plan to scale up quickly to 10,000 metric tons is a no-brainer.With demand consistently exceeding supply, I cannot imagine why would we want to lose both the momentum and our strategic advantage, he said.

In addition to the US units, the company also plans a steelhead and Atlantic salmon farm production capacity in Limbazi, Latvia, close to the capital Riga. An additional location in southern Denmark is also being considered, Shapiro said, adding he believes land-based salmon farming is here to stay.

Land-based aquaculture is simply the next evolutionary step in sustainable salmon farmingBetween the overfishing and pollutants in the water, the ocean-raised fish as food source is getting increasingly less reliable. A degrading quality and limiting quantities of healthy, safe fish are the threats to our food security and bio-safety of an important source of protein, Shapiro added. With our business and technology, we look to change the future of fish farming and challenge the status quo.

By raising our fish in a closed containment system on land, we seek to grow healthier, delicious and meaty fish to satisfy the world's demand for seafood in a safe, clean, and affordable way.