Nova Austral CEO: Hatchery, feed logistics creates “biosecurity firewall” in Magallanes region

The isolation of Chile’s Magallanes region makes it extremely challenging to run a successful salmon aquaculture operation there. It’s also why the area is so alluring to the salmon sector.

Raising salmon in such isolation drastically reduces the chances they will be struck by disease or sea lice infestation, and allows salmon to be raised without antibiotics or anti-pest treatments, according to Nova Austral CEO Nicos Nicolaides.

But the extreme distance between Magallanes and the system of infrastructure that has grown up to support Chile’s salmon-farming sector turned off several companies before Nova Austral took the plunge and began operations in the area in 2014.

“When we got in, we were really impressed by the location. But many people who looked before us saw problems. This company was for sale for a while and all the players went looking at it – Chileans and also foreigners. Everybody saw problems because of the isolation and the difficult logistics,” Nicolaides told SeafoodSource at the 2019 Seafood Expo Global in Brussels, Belgium earlier this month. “But we saw an opportunity in this isolation to build a unique concept.”

The company, through its Sixty South brand, now produces around 25,000 to 30,000 metric tons of Atlantic salmon annually, all raised without antibiotics, sea lice treatments, or use of antifouling paints in its nets.

“We try to differentiate ourselves by being the most sustainable, targeting the highest standards,” Nicolaides said.

But with fewer lines of defense preventing a potential catastrophe, and with more companies following Nova Austral into the region in recent years, the company has taken further measure to create a “biosecurity firewall” around its concessions.

“We looked at what were the risks, ways of how to reduce our risk, and how we could work to improve our longer-term biosecurity,” Nicolaides said. “We saw our two main risk factors our feed and our smolt.”

The work and the cost to address both these factors was substantial. The company decided to build its own hatchery, and to draw up a special contract with its feed and equipment providers that keeps the feed pure and third-party vessels from sailing anywhere near the Sixty South farms.

Now, the feed destined for the Sixty South salmon goes by boat to a drop-off location well north of Magallanes, where it is then moved by the company via truck to Punta Arenas, and then by the company’s own boats to the farms.

“The new logistics for our feed means that all vessels going into the farms only can sail between punta arenas and the farms, and they are all our own vessels,” Nicolaides said. “With this and the hatchery, it brings us back into a complete isolation.”

After getting the go-ahead from Nova Austral’s shareholders, the new hatchery was announced in March 2019 and is scheduled for full completion in September, when the company plans on delivering one million smolts. By February 2020, the hatchery will be able to deliver as many as 3.2 million smolts per quarter, Nicolaides said. The location of the new facility, 45 kilometers north of Porvenir, Tierra del Fuego, was strategically chosen by Sixty South as a means to “ensure clean water from the Antarctic without any parasites or disease, reducing biological risk,” the company said. 

“In the past, we have been bringing our smolts from a wellboat sailing from Puerto Montt, which takes a week. You have to keep the fish alive, pumping sea-water into the holds of the boat so the fish can breathe, but meanwhile you’re sailing between all these other farms, which scared us,” Nicolaides said. “That was the main argument to our shareholders to spend money on our own hatchery in the area.”

From December 2019 onwards, the company’s import of smolts will cease as its own hatchery catches up with its production needs. At that time, the hatchery’s production will be greater than is required by Sixty South, so Nova Austral will be offering its smolts to other companies who have already begun or who plan to begin operating in the Magallanes region. 

“Between the companies in Region X, Region XI, and Region XII [the Magallanes region] – Blumar, Multiexport, Cermaq, Australis, and Agrosuper – there is a general feeling that we have to close the import of smolts. But there is not enough capacity to do this. When all these companies knew that we were able to sell them,  they were making a line to get them,” Nicolaides said.

Of Nova Austral’s initial batch of smolts, one million are going to Australis, and Nova Austral has signed a preliminary agreement to deliver another million smolts from the next batch, according to Nicolaides.

“For our annual capacity, we can do 12 million of 120 grams or 10 million of 150 grams, so we can play a little number versus weight. Our idea is in wintertime to grow bigger, up to 180 grams – but not 250 or 500 as others will – as it is what our colleagues in the region will want,” he said.

Other companies are considering building their own hatcheries in the region, but “his will take a couple of years, at the least,” Nicolaides said.

“We feel our offering of smolts from our hatchery is good for the whole region. Because we are so isolated, it improves biosecurity for the whole region. And if the region is better-performing than the rest, that good for all of us too,” he said.

None of what Nova Austral has done in Magallanes has been simple, Nicolaides said, but the company knew what it was getting into when it purchased the concessions.

“We love complicated things,” he said. “We’re not a big company so the only way for us to succeed is to differentiate. To survive, we have to do something that’s not possible for anybody else to do.”