Uncertainty clouds Norwegian presence in British Columbia

A high profile salmon company is facing a difficult future following the publication of its latest results in the past couple of days.

That business is the Grieg Seafood Company, which saw its share price drop sharply in Oslo yesterday.

Of all the big Norwegian salmon farmers, Grieg has so far produced the most disappointing Q2 results.

It reported a £2.5m loss for Q2 after a fairly decent profit of £40m in the same quarter last year.

Norway has proved a biological headache for Grieg over the past few months, but British Columbia has become its most expensive region because low dissolved oxygen conditions on Canada’s west coast have led to increased fish mortality.

But the big uncertainly is over the Canadian Federal Government’s controversial decision to phase out open pen salmon farming within five years.

Grieg, which also has a new and potentially promising operation in Newfoundland on the other side of the country, loosely hinted yesterday that it could review its presence in the province.

It is no more than that at the moment, and the company has not made any direct threat except to say that every option is on the table. But Grieg has suspended all strategic investment in the region.

Mowi has also more or less hinted at the same thing about its own BC business, again without threatening directly.

Both companies have invested heavily in the province, where they directly and indirectly employ thousands of people. They will not want to make a hasty decision in case there is a change of mind in Ottawa.

Grieg said in its Q2 report that uncertainty remains, in the absence (so far) of any government decision on a detailed transition plan for Atlantic salmon aquaculture in BC.

It added that the process to identify long-term partners to take part in the development of Canadian operations is ongoing with an expected conclusion during autumn 2024.

The immediate situation in BC doesn’t look like improving anytime soon. Grieg said it was experiencing challenging environmental conditions in the province so far during the current (July to September) period and that these are still ongoing.

Low dissolved oxygen levels in Q2 2024 and a following algae bloom have increased mortality, impacting growth into the third quarter.

Combined with a market under pressure in North America, and low average harvest weight, a harvest volume of 3,200 tonnes is anticipated with a likely negative operational EBIT in Q3 in the range of NOK 230-250 million (£16m to £18m).

Grieg worker, British Columbia