Despite setbacks, Atlantic Sapphire still has big ambitions

The setbacks Atlantic Sapphire suffered in 2021 haven’t deterred the company from reaching its goal of farming 220,000 metric tons (MT) of salmon a year in its Miami, Florida, U.S.A.-based recirculating aquaculture system (RAS) facility by 2031, Atlantic Sapphire Chief Sales and Marketing Officer Damien Claire told SeafoodSource.

Atlantic Sapphire faced a challenging year in 2021, with the company’s Miami operation suffering a mass salmon mortality in March. Its Denmark facility then experienced a mortality incident in July – before being hit by a devastating fire in September. As a publicly-traded company, Atlantic Sapphire’s unforeseen problems were quickly reflected in the company’s stock price, which dropped precipitously following the fire. Having started 2021 at above USD 17.00 (EUR 15.26), the company's stock price now sits just above USD 4.00 (EUR 3.59).

Despite those setbacks, Claire said Atlantic Sapphire is still confident it will reach its production target by 2031 and that it has learned lessons from its past issues.

“As fish-farmers, our number-one focus is making sure the fish always have good conditions, and with that in mind, avoiding large mortality has been the top corporate priority,” Claire said. "Following the two mortality events, the company has taken concrete steps to mitigate the risks of similar events happening again, specifically when it comes to the handling of the biggest known risk in all land-based facilities: handling of gases. We are now operating 12 independent [farming units] in Miami, and have since the summer seen a stability in operations and risk control that allows us to sleep well at night.”

Despite the drop in stock price, financially, the company is still strong and on track to reach its second-phase goals, according to Claire.

“The events of the past had a relatively small financial impact on the company, and has not impacted the projected timeline for the next expansion in Miami. This phase will bring total annual production capacity to around 25,000 MT HOG towards the end of 2023," Claire said.

Atlantic Sapphire finished construction on its first phase in January 2021, after receiving approvals to begin construction in 2017, estimating at the time it would cost USD 100 million (EUR 89.7 million). As one of the first companies to announce a large-scale salmon RAS in the U.S., Claire said, the company learned lessons as it strived to do something that he said “has never been done before.”

“There have been many lessons learned over the last 10 years of pioneering the industry and getting to where we are today,” Claire said. “For example, we learned how critical it is to have the right in-house competence on the facility design and construction side, and the importance of having the right construction partners.”

Shortly after the Miami facility's mass-mortality incident in March 2021, Atlantic Sapphire separated itself from Billund Aquaculture, its RAS technology provider. Claire said many of the issues the company has faced since 2020 were caused by difficulties related to constructing the facility.

“Looking back at the last two years, most of the challenges [Atlantic Sapphire] have faced have been linked to construction issues, where we’ve been forced to farm our fish in a facility that wasn’t fully commissioned due to severe delays,” Claire said. “Thankfully, these learnings are fully taken into account when constructing phase two, which makes us confident that both construction and operation of the new phase will be much smoother.”

As for the company’s Danish facility, Claire said that there isn’t any news to report, and the company’s board of directors hasn’t made any decisions yet on how to proceed. He said the insurance process “is still active” and that the company expects a positive resolution in the next few months.

“There are several potential options being considered for our Danish Bluehouse, but a thorough evaluation of each is required before we can make a decision,” he said.

Regardless of the outcome of that process, Claire said the company is committed to its Miami operation and has no plans to open any new facilities there or elsewhere.

“In order to succeed with large-scale land-based salmon farming, you depend on certain naturally given conditions: Access to large volume of stable intake water and the ability to discharge large amounts of wastewater in a sustainable way,” Claire said.

Atlantic Sapphire Johan Andreassen visited 13 states on the U.S. East Coast before settling on the company's current site in Florida. Claire said Florida provides the best location to address those needs and the state's regulatory environment is favorable, with the company already having secured the permits needed for the full construction of its facility.

“For this reason, we will never build a facility anywhere else, when we can simply expand in South Florida, where we face no hurdles of growth,” Claire said.

Claire said the company’s business model of providing affordable yet still premium-quality product is still viable.

“Our business case is to be the lowest-cost producer in the market,” he said.

Because of that, Atlantic Sapphire is still positioned well, given the U.S. market’s growing appetite for salmon, Claire said, pointing to predictions the farmed Atlantic salmon supply will contract in 2022 even as demand continues to increase.

“Next year is a very tight market, and we expect those markets to remain tight for the foreseeable future,” Claire said. “Both ourselves and other land-based operators, as well as other farming technologies such as offshore, are barely going to be able to fill that gap between limited supply and exploding demand.”

Being located closer to the market also means the company can provide a fresh product without resorting to costly air-freight – a practice that has recently come under fire by some salmon producers due to its high carbon footprint.

“I think it’s going to be much harder for Norwegians and almost impossible for Chileans [to give up air freight] unless we get even better technologies for longer shelf-life,” Claire said.

The company's eventual goal is to make Atlantic Sapphire’s salmon a well-known brand in the U.S., backed by its message of sustainability, Claire said. Atlantic Sapphire's trailblazing efforts to counter some of the negative perceptions farmed salmon has developed in the U.S. market will help the entire industry, he said.

“I feel that we have a lot of the answers to all the naysayers about net-pen farming, and I think that we drive that traffic to that seafood counter,” Claire said. “The opportunity is to be on the shelves, to tell our story.”  

Photo courtesy of Atlantic Sapphire