Gråkjær dispute settled, but Fredrikstad Seafoods considering switch to yellowtail at Øra RAS

Fredrikstad, Norway-based Fredrikstad Seafoods has won a decision from Norway’s Borgarting Court of Appeal ruling Gråkjær must compensate the company for a construction failure at its land-based fish farm in Øra, Norway.

Gråkjær was ordered to pay NOK 60.9 million (USD 6.9 million) plus interest, totalling more than NOK 77 million (USD 8.7 million), Bernt-Olav Røttingsnes, CEO of Fredrikstad Seafoods’ parent company Nordic Aquafarms, confirmed to SeafoodSource.

Fredrikstad Seafoods built Nordic AquaFarms’ and Norway’s first large-scale land-based fish farm, which has been in operation since May 2019 and in production since mid- 2020. Holstebro, Denmark-based Gråkjær and Fredrikstad Seafoods were in a long-running dispute over who was responsible for a major construction failure, discovered in February 2017. The foundations on which concrete structures for the fish farm had been built were found not to have been strong enough to support the farm’s weight. As a result, the buildings were demolished, the foundations redesigned, the fish farm rebuilt by a new contractor, and Gråkjær’s contract was terminated.

Unable to resolve the dispute internally, the two sides turned to the legal system and in 2020 a District Court ruled the termination of the turnkey contract with Gråkjær over the design error was unfair. Fredrikstad Seafoods was ordered to pay DKK 22.7 million (USD 3.4 million) in compensation to the Danish company, plus NOK 15 million (USD 1.7 million) in legal costs.

This decision was appealed, leading to the recent court hearing finding that Gråkjær had failed to take into account differences in soil type between another land-based farm it had constructed for Sashimi Royal, a sister company of Fredrikstad Seafoods in Hanstholm, Denmark, and the Øra site.

Despite the court victory, Røttingsnes said his company is currently reconsidering the future of the RAS farm and recently filed an application to switch production to yellowtail.

“Sashimi Royal currently produces this fish very successfully in Denmark, where we have a hatchery, Broodstock, and growout unit, and as the growout facility in Fredrikstad is similar, we looked to see how we can make best use of all our facilities in the Nordics,” Røttingsnes told SeafoodSource.

Røttingsnes said he sees great potential for selling more yellowtail in Europe, as demand currently far outstrips the company’s supply capacity. Importantly, he said, yellowtail currently achieves almost double the market price of salmon, so to convert the Norwegian site to grow yellowtail makes economic sense.

“The Fredrikstad facility would require very few alterations – the main one is to adjust the temperature of the water. Salmon need a temperature of around 12 to 13 degrees Celsius, whereas yellowtail need warmer water, at around 20 degrees Celsius, to thrive,” he said.

Røttingsnes said Fredrikstad Seafoods has received positive feedback from Norway’s permitting authorities after taking the first step in applying for the switch, and he said he hopes the process will be completed sometime this year. This would allow stocking to start in 2023 and the first harvest to commence in early 2024.  

“Our intention is firstly to increase production capacity at Sashimi Royal to around 1,000 MT from the current 600 MT, and to supply Fredrikstad with 300-gram fish for ongrowing. The next step is to increase production at Fredrikstad, then to maximize production in Denmark. Between the two sites, we should be able to produce at least 8,000 MT per year, but as we have our own broodstock, we can produce even more, if and when the market develops,” he said.  

The change of emphasis to growing yellowtail in Norway is part of Nordic Aquafarms’ wider strategy to produce fresh, premium seafood with a focus on local supply.

“It is becoming increasingly unacceptable to fly fish around the world, so our intention is to focus on producing fresh yellowtail in Europe for the European market and producing fresh salmon in the U.S.A. for the American market,” Røttingsnes said.

Nordic Aquafarms has a bicoastal U.S. strategy, which is being executed through its subsidiary Nordic Aquafarms. Final permits were recently awarded for its facility planned in Belfast, Maine, U.S.A. and permits are expected to be granted for its Humboldt, California, U.S.A. site later in 2022.

“We expect to have two fully permitted sites in the USA by the end of 2022, and look forward to getting the facilities built and up and running,” Røttingsnes said.

Photo courtesy of Fredrikstad Seafoods