Rising costs halt construction of AquaBounty’s Ohio plant

Land based salmon farmer AquaBounty Technologies has “paused” work on its planned facility in Ohio, citing cost inflation. The US company has not specified when work will resume, and has left open the question of whether the project might go ahead at a smaller scale.

AquaBounty is the first company to produce genetically-modified (GM) salmon at commercial scale. Their fish combine the DNA of Atlantic salmon with other salmonid species in order to achieve faster growth, and are grown in RAS (recirculating aquaculture systems) farms.

Ground was broken at the new site in the township of Pioneer, Ohio in April this year. The farm was planned for a production capacity of 10,000 tonnes.

In a stock exchange announcement on Friday, AquaBounty’s CEO Sylvia Wulf said: “During the past three years, AquaBounty has been working with its design and construction partners to manage through and mitigate the increasing costs that were exacerbated by historic inflation levels to complete construction of its Pioneer, Ohio farm. As cost estimates provided by our initial design/construction firm continued to increase, we engaged a second construction firm in January of this year to review the current cost estimates and to rebid the remaining construction elements in order to finalize the project’s Guaranteed Maximum Price (“GMP”), which was integral to completing our municipal bond financing.

“Despite the value engineering and cost reduction efforts we undertook, the GMP estimate that we received came in at a price that is significantly above our previously disclosed estimate of $375m – $395m [£302m – £319m]. Given this information, we cannot finance the project through a municipal bond placement without a significant increase in the Company’s equity contribution. As a result, the Company has put an immediate pause on further construction of the site while the management team undertakes a detailed review of its strategic options, including evaluating a smaller scope or size for the farm.”

She added that AquaBounty has been working closely with the Village of Pioneer on the water and wastewater lines for the Ohio farm and the Village has approved the creation of a public utility, which will own and operate the water and wastewater lines required for the farm’s operation.

AquaBounty is currently waiting for the issuance of the Right of Way (“ROW”) permit from Williams County. Wulf said Aquabounty appreciated the support and collaboration from the State of Ohio, Williams County Economic Development Corporation and the Village of Pioneer.

Sylvia Wulf, CEO, AquaBounty Technologies

Wulf concluded: “We believe in this project and its importance to the Company’s growth strategy. Our focus now is on bringing it to completion in a manner that is prudent for the Company and our shareholders. In the meantime, we intend to continue to supply our customer base with salmon from our Indiana farm, while using that facility to improve our operational practices and to test new technologies in preparation for the Ohio farm start up. Progress also continues at our PEI farms to expand the production of non-transgenic eggs and fry and on our R&D work focused on improvements in our broodstock and the improvements in the overall health and well-being of our fish. I look forward to providing further updates on our review process over the coming months as we strive to create sustainable value for our shareholders.”