Nordic Aqua is discarding 2,000 tonnes of fish due to continued geosmin issues
The China salmon farmer faced challenges with the off-flavour compound in July. These have persisted and led to reduced feeding, which in turn means all commercial harvesting in the second half is cancelled. Investments to manage geosmin are estimated at approximately €19 million.
According to a quarterly report, Nordic Aqua's operations in the third quarter of 2024 were affected by previous episodes of elevated geosmin levels.
No commercial harvest was therefore conducted during the period, which negatively affected the results.
"However, underlying operational and biological performance was good for all batches," the company reports.
Total biomass production exceeded 1,000 tonnes in the quarter, and total biomass reached nearly 2,800 tonnes by the end of the period.
"Fish health and welfare were good, and mortality was low," the company writes.
Phase 2 as planned
Chief executive Ragnar Joensen is nevertheless optimistic.
"We are encouraged by the progress in recent months and are pleased to see our operations bounce back after the setback with geosmin. With strict measures in place and strengthened biological performance, we are now positioned to continue expanding our Nordic PureAtlantic brand in the Chinese market," he says.
Despite the adjustments to handle the biological situation, the construction of the operational facilities in phase 2 continues as planned.
Capacity increases for the hatchery, start feeding, parr unit, and smolt unit are completed and operational, and the first egg placement was successfully carried out in September 2024, according to the company.
£24.8m equity raise
In September, the company also conducted an equity issue and raised new equity of NOK 350 million (£24.8m).
Together with the company's strategic agreement with the Bank of China, this will secure financing until the completion of phase 2, as well as repayment of short-term debt, investments related to improvements of geosmin, working capital, and other general corporate purposes.
"We are well under way with the expansion of phase 2, which will double our capacity to 8,000 tonnes. The technical installations are expected to start in January 2025 with the first harvest planned in the second half of 2026. Preparations for phase 3, which will expand the capacity to 20,000 tonnes, are ongoing, and a final decision on the timeline will be made in the first half of 2025," says Joensen.
Outlook
Nordic Aqua says it expects to gain control over the geosmin situation in the coming months.
The work to increase production will continue, according to the Q3 report, and salmon harvesting will resume. In line with previous announcements and as part of managing the biological situation, it is expected that around 2,000 tonnes of salmon will have been culled by the end of the year: 651 tonnes that were removed in Q3; 560 tonnes that were removed in October 2024; and approximately 870 tonnes are expected for the rest of the fourth quarter of 2024. No commercial harvest is expected in the fourth quarter of 2024.
As operations gradually normalise, Nordic Aqua expects to slaughter around 4,000 tonnes next year.
Managing geosmin
The company has implemented corrective measures to safeguard against geosmin challenges:
- Changes in operational protocols for biofilters
- Increased capacity for ozonation (pictured above)
- Technology to remove geosmin in the purification unit
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- Protein skimmers (pictured below) in production units
Capital expenditure related to geosmin management, including preventive improvements, is estimated at around NOK 220 million (€ 19m / £15.6m).
