Completing re-build but putting other investments on hold
Iceland's Arctic Fish will finish the replacement of a hatchery building damaged by fire. Further work at the smolt facility is deferred while the company awaits new framework conditions.
Published
Modified
Arctic Fish chief executive Daniel Jakobsson says the company is completing the replacement building at its smolt facility in Nordurbotn, Iceland. The work is being financed with money from the insurance settlement following the fire in February 2023.
Once the building is erected, the company will not invest further in reconstruction and equipment until it has gained greater clarity about future production fees - a form of tax - and regulatory framework conditions.
"We have shown that we can and will invest and grow in Iceland. But further investments must be economically justifiable. With the current framework, we cannot justify spending more capital," Jakobsson told LandbasedAQ.
The statement comes in connection with the company's second quarter report. Arctic Fish harvested 5,595 tonnes in the quarter, and booked an operating loss of €-3.1 million.
Jakobsson described the result as disappointing, but points out that it is mainly due to low market prices.
Blaze delayed the expansion
The fire in 2023 affected a building under construction that was to be part of the expansion of the smolt facility. The facility in Nordurbotn uses RAS technology.
In the quarterly report, Arctic Fish states that the company has permission for land-based smolt production on its own property in Nordurbotn, with an annual production capacity of 2,400 tonnes.
The company also writes that the biological development in smolt production was under control and in line with expectations in the second quarter.
Further reconstruction and equipment after the fire is therefore put on hold. Ongoing smolt production will continue.
Waiting for clarifications
Jakobsson refers to uncertainty surrounding the new Icelandic aquaculture law and the level of industry-specific taxes related to sea-based food fish production.
"Per kilogram (of salmon produced), we estimate that these costs are at least three to four times higher than comparable fees in Norway."
Jakobsson pointed out that the proposal for a new aquaculture law was presented to Iceland's parliament, the Althing last winter, but not finalised.
"This is not a sustainable framework for an industry that must invest significant capital over a long period of time, and that is running at a loss."
Arctic Fish will therefore not commit new investment capital in Iceland until the company has gained greater clarity about the framework conditions.
Can still increase production
The investment pause does not mean that Arctic Fish will stop increasing production in the short term. The company believes that it still has spare capacity in the existing production system and can increase overall production without significant new investments.
“Higher production should continue to lower costs through economies of scale. In addition, we are continuously working on more efficient operations and other cost savings,” says Jakobsson.
Arctic Fish harvested 11,624 tonnes in the first half of the year and maintains its expectation of a total harvesting volume of 18,000 tonnes in 2026.