What’s happening with the government’s $30 million loan to Grieg’s Newfoundland salmon farm, now construction is delayed?

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After posting a profit warning, and due to increased market uncertainty, some construction at Grieg NL’s USD 250 million Placentia Bay project has been put on ice. Workers at the site have also been laid off.

On Wednesday, SalmonBusiness reported that the salmon farmer Grieg Seafood posted a profit warning, announcing that “following the outbreak of Covid-19, market uncertainty increased, and prices have come down in all core markets, impacting Grieg Seafood’s earnings negatively”.

Market uncertainty

Grieg posted a negative EBIT of EUR -17 million. Due to this and with the current COVID-19 environment marked with “increased market uncertainty”, “low salmon prices”, and “reduced market visibility”, Grieg said it was currently evaluating its projects. This includes Grieg NL’s USD 250 million Placentia Bay project in Newfoundland, Atlantic Canada. The 50,000-tonnes-a-year site got the greenlight in 2018.

Currently being constructed, Grieg said that it originally set to create more than 800 jobs — 440 direct jobs at Grieg NL and its processing facilities, and about 380 jobs in affiliated sectors.

Laid off
Newfoundland based news site Salt Wire reports that construction workers employed by Grieg NL Development, the company overseeing construction of the land-based salmon hatchery and growing facility, were laid off as soon as Grieg’s profit warning was announced. 193 people are employed in the build process but it is not yet known how many were laid off and if that’s permanently or temporary. 

Part delayed. PHOTO: Grieg NL

Perry Power, Human Resources Manager at the Marystown site, told the publication that some workers will stay to finish the smoltification building, which is nearly finished. The project for post-smolt A will at a later stage be evaluated for construction.

53 people are employed with Grieg Seafood NL in salmon farming. “We anticipate the requirement for long-term employees will continue,” Perry Power, Human Resources Manager at the Marystown site told the publication, meaning salmon farmers and biologists etc will stay.

In 2018, SalmonBusiness reported that the province revealed its stake in Grieg NL’s USD 250 million Placentia Bay project to the sum of CAD 30 million in repayable financial assistance.

Flow
Fisheries minister Elvis Loveless provided Saltwire with a statement that: “No money has flowed to the company at this stage, and it will only flow if and when milestones are reached”.

“At this point, there is no reason to think that money will not flow as this is a delay, not a cancellation. Grieg Seafood Newfoundland has assured me this is a painful decision based purely on global circumstances,” he added.

In Grieg’s statement on Wednesday, the company said that its “ambition for the Newfoundland project remains,” and the company is “committed to develop the project according to milestones outlined in the permissions granted by the authorities”.

“The first fish is already growing in the freshwater facility and the annual harvest volume target to be reached by 2025 for the first phase is still 15,000 tonnes, with the first harvest planned for 2022/2023,” it concluded.