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Australia

Seafarms’ Sea Dragon Project—Update

 

   

 

Two ponds mark the start Seafarms’ ambitious Project Sea Dragon, a $1.6 billion dream of the small, $76.8-million Seafarms Group to build the biggest giant tiger shrimp farm in the world.

 

   

 

Seafarms’ director and company secretary Harley Whitcombe admits he is already starting to visualize the river flats—now dotted with scrub trees and a few wandering white Brahman cattle—covered with the first stage of 1,120 hectares of 120 ponds brimming with juicy, high-value tiger shrimp destined for high-end consumers in China, Japan and Europe.

 

It’s an image that many in Australia’s financial world believed will never happen, dismissing the vision and prospectus being pushed globally by Seafarms’ persuasive executive chairman Ian Trahar—well-known for his earlier forays in mining, corporate jets, curtains and carbon farming—as yet another northern Australian pipedream.

 

But with all environmental approvals and native title deals with traditional indigenous land holders locked away, with more than $55 million of funding from the states of Northern Territory and Western Australia and the federal government to build a year-round sealed road to the farm secured, and with international buyers and funders circling to grab a share of the massive shrimp farm it now appears possible Project Sea Dragon will indeed fly.

 

   

 

Project Sea Dragon, when fully completed by 2025, aims to produce 150,000 tons of giant tiger shrimp annually, valued at $1.3 billion in export earnings from 10,000 hectares of ponds, making it the largest tiger shrimp producer in the world.

 

The company, which plans to build a $157 million shrimp processing plant in Kununurra that will employ more than 200 locals, is also hoping for significant cheap-loan funding from the federal government’s $3.9 billion Northern Australia Infrastructure Facility and assistance in developing small and degraded Wyndham Port to export its frozen shrimp to Asia.

 

“There’s still a lot of steps to go to get to our first stage of 1,120 hectares of ponds...but this is the beginning; we have shown the ponds will work and our approvals are all through,” Whitcombe said.  “The next six months will all be about finalizing our financial structure and capital raising.  There are as many variations about how we do that as you could think of.”  Nothing further can be built at the farm site until Seafarms completes the rumored $62.7 million purchase of the site, which must be done before February 2018!

 

USA-based financial advisers and investment bankers Lazard are managing the funding for the first phase of constructing, which will be about one-ninth of its final size.  This will require a significant capital injection or even the sale of a majority of the project.

 

Whitcombe said several large Japanese and Chinese investors are each keen to put $157 to $392 million into the project, some of it in return for guaranteed shrimp shipments, while there is also interest from investors linked to Norway’s salmon farming industry and Scandinavian sovereign funds.

 

The Seafarms Group has already laid out $56 million on the project with only its all-important approvals and two small trial ponds to show for it.

 

Getting to stage one—building 120, 10-hectare ponds divided into three shrimp farms for biosecurity reasons by 2019, producing 14,000 metric tons of shrimp a year worth $153 million—will necessitate the construction of a village for more than 200 permanent workers at the site, a small modular processing plant in Kununurra that can be expanded, a power plant to supply electricity to aerate the ponds, and the hiring of 400 construction workers.

 

Whitcombe said the four directors including himself own 36 percent of Seafarms.  Ian Trahar holds close to 30 percent.  They have told existing shareholders that they are not prepared to “give away” either Project Sea Dragon or Seafarms, which also owns Australia’s biggest existing shrimp farming business near Cardwell, Queensland, to foreign investors for nothing.

 

Source: The Australian Business Review.  Aquaculture: Hopes Rise for $2bn Prawn Farm Project.  Sue Neales.  Picture, Aaron Francis.  September 28, 2017.

 

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