Highland Councilors granted the salmon producer the planning permission yesterday (21 February).
The plant will be located in Skye. It will supply Scottish fish farms as well as those in Norway, Ireland and the Faroe Islands.
Work on the factory, which Marine Harvest first announced in April 2016, is set to start next month.
The Norway headquartered company said the build, costing some €110m ($115m), will be completed during 2018, and that it expects the investment to yield good results - a capital return target in the range of 15%.
The factory will have total capacity of around 170,000 tons, with the potential for further expansion, while the feed range at the Skye plant will include starter feed for freshwater and organic feed for its Irish operations. In terms of likely feed formulation innovation, Steve Bracken, business support manager, Marine Harvest Scotland, said: "Marine Harvest is already using alternative proteins and oils and continues to research and develop this aspect of its operations. This will continue."
Ecological objectives have been integrated into the project: "The plant will use liquid natural gas which is a much more sustainable energy source than current arrangements. Most of the raw materials and the pelleted feed will be transported into and out of the site by sea, thereby substantially reducing the number of vehicle movements over current arrangements," Bracken told us.
The salmon company also said it is weighing up the sustainability and operational benefits of constructing a fishmeal factory in Scotland, one that would utilize all edible by-products from salmon processing, but it is not evident yet where such a plant would be built: "We are at an early stage in examining the business case for the fishmeal plant and consideration of potential locations will form part of that process," added Bracken.
Marine Harvest is the largest salmon farming company in Scotland, producing more than 45,000 tons in 2016. The company has four hatcheries, five freshwater loch sites and 42 sea farms, situated in the Western Isles, Skye, Argyll, Wester Ross and Lochaber.
It also has farms in Norway, Chile, Canada, and a small production site in the Faroe Islands.
Citing high salmon prices, strong demand and reduced supply, it reported operating EBIT of €259m in Q4 2016, compared to €90m in Q4 2015. It recorded operating EBIT for the full year €700m, up when compared to the €347m it registered for FY 2015.
Integration strategy
The salmon producer first entered the feed production business in July 2014, with the opening of a 200,000 metric tons (MT) facility in Bjugn, Norway as a way to get “control over the whole value chain.”
Last year the company noted: “The factory at Bjugn has over the past 18 months proven to be a success. Operational excellence and effective transportation and logistics have been key contributors to the good results. Today the factory covers approximately 80% of our Norwegian feed requirements.
“We see, however, that third party European feed purchases remain significant, within Scotland, Ireland and the Faroe Islands as salmon farming centers where we today are 100% supplied by external feed companies.
“A second feed factory is therefore in line with the strategy of being a fully integrated protein company.”
It also flagged then that that all existing external feed supply contracts in Scotland, Ireland and the Faroe Island would expire during the first half of 2018.
Some industry analysts questioned that strategy, saying establishment of a feed plant outside of Norway might not be financially sound, considering the smaller production scales involved.
Marine Harvest unveils project management team
Following approval by the Scottish authorities, Marine Harvest also announced the team responsible for managing the build.
Mick Watts has been appointed project director and global engineer on the build. Marine Harvest he will oversee the construction and commissioning as he did with the company’s Norwegian feed plant in 2014.
It said Claes Jonermark, Marine Harvest’s operations director for Europe, will continue to run the company’s main production site in Norway but will also be actively involved in the commissioning and set up associated with the Scottish plant.
Meanwhile, Ewan MacColl, previously processing and logistics manager at Marine Harvest Scotland will take on the role of operations director, processing and feed Scotland.