Two Iceland Salmon Farm Licenses Revoked


Two Icelandic salmon licenses, worth 17,500t, revoked

By Neil Ramsden Oct. 5, 2018 10:04 BST

Two of Iceland's growing salmon farmers are reeling after an appeals board ruled the government's decision to grant them licenses in the Westfjords region was incorrect, and revoked the licenses.

SalMar-backed Arnarlax and Arctic Fish -- which is half-owned by Norway Royal Salmon (NRS) -- have seen licenses to farm 17,500 metric tons between them revoked, in Patreksfjordur and Talknafjordur; 6,800t to Arctic Fish, and 10,700t to Fjardalax (which Arnarlax acquired).

The licenses were granted by the Food Authority and the Environmental Authority in December 2017 -- for Arctic Fish this was a new license, while for Arnarlax it was an expansion of an older license. However, the expansion granted the company to move to a slightly different location, meaning, essentially, the site it currently has in operation in these fjords is no longer legal.

On Sept. 27 Iceland's Environmental and Natural Resources Complaints Committee met to discuss an appeal lodged by a number of environmental groups and fishing rights holders.

Its decision was that the planning agency responsible for granting licenses had not carried out the environmental impact assessment to its fullest, and so, the licenses were revoked.

One Icelandic source, familiar with the licensing process, told Undercurrent News there was no appeal process available to the companies, and that they will need to begin the license application process again should the decision be upheld.

"From the news [in Iceland] it is clear that they are putting a lot of pressure on politicians to have the licenses somehow kept valid, but that would mean a retrospective law to pass through the parliament, which would be very controversial, and most likely impossible," this source said.

"At the end of the day that would go against the current law framework, which is based on EU law which Iceland has to obey according to the European Economic Area agreement," he added.

Arnarlax, Arctic Fish, and Landssamband Fiskeldisstodva -- the country's aquaculture association -- all told Undercurrent the issue was just developing, and that they wished to wait before commenting.

Why was the decision made?

The appeals board ruled that the original environmental impact assessment (EIA) did not adequately cover an evaluation of alternatives to open net-pen salmon farming in the ocean.

It cited the complaint it received as stating that the use of sterile (triploid) fish; land-based farming; closed-containment pens; or simply reduced volumes at sea should have been considered.

According to paragraph two, article nine of Icelandic planning regulation 106/2000, an EIA must always cover the main alternatives of the project and compare the environmental impacts of each. This article is based on an EU directive proposing the same.

While the appeals board acknowledged that some of the alternatives to open-net pen farming are not realistic at this point, it stated it was unacceptable they were not all given full consideration.

As the EIA did not include this, it was found that the Veterinary Authority should not have granted the licenses in the first place, and thus they were revoked.

Causing a storm

A second Icelandic source told Undercurrent the central government in Reykjavik is now being lobbied, both by the companies and the coastal communities which stand to take a serious hit from this decision.

"It's certainly become a wider political issue. They have to think about the potential for investment in Iceland -- this will trouble investors. And what about those investors who have already put money into the country based on licenses granted?"

The priority for the salmon farmers in question would likely be to try and delay the implementation of the ruling, so that at least the operations in the sea do not suddenly become illegal, he suggested.

Speaking to Undercurrent earlier in 2018, Arnarlax CEO Kristian Matthiasson noted its Talknafjordur site has been struggling with high mortalities since spring 2017.

"This was an adopted Fjardalax site, which we will be moving at the end of harvest because it does not hold the environmental capabilities we demand from our sites."

It is unclear if this means it meant to leave this site anyway, or whether the license granted for a shift in location is the one which has now been revoked.

It's been an unfortunate year for Arnarlax, which was pushed back into the red in the first quarter of 2018 by high mortality rates.

The young company has faced ongoing startup costs and expensive production, given the small-scale it has been necessary to start at. However, in Q1 2017 the firm had seen revenues rise to NOK 146 million ($18.2m), and operational earnings before interest and tax climb to NOK 35m.

Biological problems have interrupted that progress in 2018, though.

"The company experienced an unusually high mortality rate caused by the handling of fish when sea temperatures in Iceland were extremely low," noted SalMar in its Q1 report. "Further handling mortality occurred in connection with the relocation of fish after one of the company’s net pens was damaged in a storm. This extraordinary mortality has been recognized as an expense in the quarter."

For Arctic Fish, meanwhile, the 6,800t license in Patreksfjordur and Talknafjordur is its single largest.

In 2017 it received operating licenses for 4,200t of production in Dyrafjordur, one of Iceland's Westfjords, doubling compared with the previous license of 2,100t.

The company has applied for licenses to increase production by another 5,800t to 10,000t, as well as an application to produce 4,000t in Arnarfjordur.

Contact the author neil.ramsden@undercurrentnews.com