Marine Harvest to build £80m feed plant in Scotland

MARINE Harvest is to build an £80 million feed factory in Scotland, the company announced today.

The factory is expected to have a total capacity of around 170,000 tonnes of feed, with the potential for further expansion.

The construction phase is planned to commence in 2017 and expected completion will be in the first half of 2018.

All existing external feed supply contracts in Scotland, Ireland and the Faroe Island expire during the first half of 2018.

The company also announced today that it is considering expanding into service vessels, such as work boats, well boats and feed boats.

The specific location of the feed plant, which is subject to acquiring land, obtaining relevant permissions and consents, has yet to be decided. But it will be positioned ‘to deliver feed to our operations in Scotland, Ireland and the Faroe Islands’, said the company, although ‘this may change or develop over time’.

Marine Harvest expanded into fish feed with its first factory opening at Bjugn in Norway in 2014. The factory has proven to be a success over the past 18 months.

‘Operational excellence and effective transportation and logistics have been key contributors to the good results. Today the factory covers approximately 80 per cent of our Norwegian feed requirements,’ said the group.

‘We see, however, that third party European feed purchases remain significant, within Scotland, Ireland and the Faroe Islands as salmon farming centres, where we today are 100 per cent supplied by external feed companies.

‘A second feed factory is therefore in line with the strategy of being a fully integrated protein company. After careful consideration, Scotland is viewed as the best alternative due to its ability to fully serve our internal feed requirements in a cost effective manner.’

The range of feed types at the Scottish facility will be broadened to include starter feed for freshwater and organic feed for our Irish operations.

The investment will be phased over the years 2016-2018, with approximately 95 per cent of the capital expenditure falling within 2017-2018.

The investment size reflects that the product range will be broadened. The investment is expected to yield good results, with a capital return target in the range of 15 per cent.

Existing management within Marine Harvest Fish Feed will provide support to the build-up of the new operational management.

A new business area, to be called Marine Harvest Shipping, will see the company explore integration further.

‘There are a substantial number of vessels operating in connection with Marine Harvest today,’ said the company.

‘The biological situation in Norway and our other farming regions makes well boats an integrated part of the value chain. 

‘Vessel use in salmon farming systems is increasing in significance due to increased smolt transportation, sea lice, grading of fish, freshwater treatments and harvesting; as a consequence we see significant scope for integration in this area of our operations.’

The vessel business will be supported by existing corporate group functions and will be developed gradually through organic growth. Marine Harvest will now explore in detail the options within this business segment and will hire a COO for Marine Harvest Shipping in 2016.