Chile takes further action against “recalcitrant offender” Nova Austral

Chile’s Superintendency of the Environment (SMA) has moved to revoke the environmental license at three of Punta Arenas, Chile-based salmon farmer Nova Austral’s grow-out centers in the Alberto de Agostini National Park and apply a fine for the artificial alteration of the seabed at another center.

The action marks the first time that an environmental permit has been revoked since the creation of the SMA. The moves must now be approved by Chile’s Third Environmental Court; Nova Austral has five days to file an appeal for reconsideration and 15 days to present a legal claim.

“The SMA was obliged to make a historic decision, delivering a clear signal. These levels of overproduction, causing environmental damage, cannot be generated in protected areas such as the Alberto de Agostini National Park,” SMA Acting Director Emanuel Ibarra said in a press release. “We are facing a recalcitrant offender, who already has a number of serious proceedings in the SMA. With this, we hope that the owner can improve its environmental behavior in all the centers it still has.”

SMI found Nova Austral exceeded permitted production by 15 percent at its Cockburn 14 grow-out center between October 2015 and May 2017; by 30 percent at Cockburn 23 between January 2016 and November 2017; and by 25 percent at Aracena 10 during the 2016-2017 production cycle. In response, SMA will revoke Nova Austral’s license to operate these centers. In addition, the government agency will levy a fine equivalent to CLP 909 million (USD 938,000, EUR 921,000) against Nova Austral for artificially altering the seabed of the Aracena 14 center in the city of Punta Arenas.

The SMA said it had considered the magnitude of the environmental damage done in the protected area; the company’s intentionality, considering that sowing, grow-out and harvesting are planned actions under total control of the company; the company's recalcitrance, with several previous sanctioning procedures filed against it; and the economic benefit obtained as a result of the infringements, in making its decision.

In a statement sent to SeafoodSource, Nova Austral said it believes the moves to be unjustified.

“The sanctions imposed by the SMA are unjustified and disproportionate taking into account the background information in the process, including the defense presented by the company. They are also inconsistent with the sanctions imposed in other comparable cases. Nova Austral will exercise all the resources that the law contemplates to reverse this measure,” the company said.

Nova Austral has been in regulatory trouble since June 2019, when Chile’s National Fisheries and Aquaculture Service (Sernapesca) began investigating alleged underreporting of mortalities first publicized by a Chilean newspaper. Sernapesca soon after filed three formal complaints against the company for adulteration of information. In May 2022, Nova Austral was slapped with  a CLP 1.32 billion (USD 1.52 million, EUR 1.47 million) fine levied by the SMA for five infractions reportedly committed in 2017 at its Aracena-19 salmon grow-out center. The company is currently appealing. Additionally, in June 2020, Chile’s Council for the Defense of the State (CDE) filed a criminal lawsuit against former several of the company’s former executives, forcing an investigation into their responsibility for fraud.  

“Our document review was that which permitted the detection of overproduction, and after that, with on-site inspections we detected new irregularities which have now ended in historical sanctions,” Sernapesca Acting Director Fernando Naranjo said. “As a state auditing institution, we ratify our commitment to continue the in-person, document, and remote auditing of these centers, convinced that aquaculture is a relevant activity for the country that must be developed in harmony with the environment to consecrate its sustainable development.”

Nova Austral is owned by the equity funds Altor Fund III and Bain Capital. It posted a net loss of USD 11.4 million (EUR 10.6 million) in the first quarter of 2022, an improvement from the loss of USD 15.2 million (EUR 14.1 million) it saw in the same period in 2021. The company’s revenue decreased 24 percent in Q1 2022 to USD 19 million (EUR 17.7 million) versus the USD 25 million (EUR 23.3 million) posted in Q1 2021, mainly due to a 41 percent drop in volumes sold, down 1,900 metric tons (MT) whole-fish equivalent (WFE), though this was partially offset by 25 percent higher average prices per kilogram WFE.

Nova Austral said it is a company that has obeyed the high standards that Sernapesca has called for.

“Nova Austral has put sustainability and respect for the environment at the center of its management, for which it deeply regrets the sanction,” it said. “For more than three years, the company has been deploying a series of measures that include independent investigations, a complete internal restructuring, the creation of a complaints channel and the reinforcement of internal controls, which has allowed the company to add and recover certifications that guarantee the highest environmental and compliance standards in their operations. Additionally, it has actively collaborated with the SMA in the investigation.”

Chilean President Gabriel Boric, who took office in March 2022, has questioned the sustainability of the country’s salmon industry, which is valued at USD 5 billion (EUR 4.9 billion) annually. The industry has also been criticized by environmental groups and National Geographic.

In June, SMA brought charges against salmon farmers Cermaq Chile and Australis Mar, claiming they overproduced at production centers located within the Kawésqar National Reserve in the southern region of Magallanes. If found guilty, the farmers risk revocation of their environmental permits, closure of operations, or fines of an amount equivalent to up to CLP 3.3 billion (USD 4 million, EUR 3.7 million). Later that month, the environmental watchdog initiated a new sanctioning procedure against Australis Mar for overproduction at its 20-hectare Estero Retroceso grow-out center in Chile’s Magallanes Region, in the southern part of the country. That procedure marked the sixth case that SMA has opened against the company, and the fourth concerning overproduction.

At the beginning of July, SMA’s Los Lagos Regional Office inspected salmon farmer Multi X’s Chaparano center located in Cochamó, confirming the construction of an unauthorized bypass for the discharge of effluents and the use of chemicals that can alter the biodiversity of the surrounding area, where there are wetlands. It ordered remedial actions, closure of the bypass, and constant monitoring of activities.

Photo courtesy of Nova Austral