In another reversal, Australia's Seafarms recommits to massive Project Sea Dragon

Seafarms Group Limited has made a new commitment to move forward with “Project Sea Dragon," its plan to build a large-scale, land-based prawn aquaculture project in Western Australia.

The company selected a contractor for the project in March 2021 to build a farm comprised of approximately 396 hectares of ponds and associated infrastructure in order to grow 6,000 metric tons (MT) of black tiger prawns annually. The eventual goal was to build up to 10,000 hectares of ponds for black tiger production, at a then-estimated cost of AUD 1.45 billion (then USD 1.1 billion, EUR 941 million).

The company broke ground on phase one in December 2021, under the leadership of new CEO Mick McMahon and new CFO Ian Brannan, who were hired in September 2021. Soon after, McMahon and Brannan initiated a review of the project that found the company could not proceed “in its current form" due to logistical and financial concerns, including a funding shortfall. McMahon subsequently ordered a pause in the project’s development, and eventually, he resigned as CEO in May 2022.

A subsequent review by the company, with results announced in November 2022, found there was “no technical reason why it should not continue." However, Seafarms Group Limited decided to withdraw funding for the project in February 2022 and the company announced it placed the project into voluntary administration.

Now, after all of the ups-and-downs, Seafarms is recommitting to Project Sea Dragon.

“The financial modelling is sufficiently complete, with the remainder of the documents describing the revised business case and options for development well-progressed,” Seafarms CEO Rod Dyer said in a statement on the Australian Stock Exchange. 

The new commitment takes into account the November 2022 assessment, which Dyer said found “no technical reasons” why the project should not proceed. 

“Key risks of the March 2022 project review, particularly regarding the use of 10 [hectare] ponds and the absence of [financing], have been addressed in the updated plans,” Dyer said. “We have taken these concerns seriously and have reevaluated all aspects of the project.”

Dyer said Seafarms has engaged with both international and local aquaculture professionals on each step of its development and confirmed customer commitments to the end product.

“It is important to note that the March 2022 project review undertaken by McMahon and Brannan was affected by travel restrictions and limitations due to the global Covid-19 pandemic,” Dyer said. “Consequently, there was no international travel to operations or engagement with international professionals for review purposes.”

Since travel restrictions were lifted, Dyer said he traveled through central America to Columbia, Ecuador, Honduras, and Mexico, and inspected “very successful” 10-hectare ponds and larger pond operations and discussed the project with experts and suppliers.

“The conclusion of this research clearly supported the feasibility of 10-[hectare] ponds in Australia as part of Project Sea Dragon,” Dyer said. 

Dyer said Project Sea Dragon has gained all of the government, environmental, and indigenous approvals it needs to complete phase one of the project, enabling the creation of 1,120 hectares of grow-out ponds that could produce over 15,000 MT of product annually. 

Dyer said the company has resumed conversations with potential funders and debt providers as it makes its business case to begin construction, potentially on a smaller “stage 1a” that would consist of 200 hectares of grow-out ponds. 

“The board is now pleased to advise that we are reengaging with both previous and new funders, as well as debt providers for the future funding requirements for Project Sea Dragon,” Dyer said. “The board will assess the updated business case and funding arrangements before making a final investment decision for Project Sea Dragon. A further announcement will be made to the market once that decision has been made by the board.”  

Photo courtesy of Seafarms Group