SPECIAL REPORT: Analysis casts doubt on financial viability of yet another fish farm

JONESPORT, Sept. 1, 2023 - Is the State of Maine being played again by a foreign company making unsustainable promises to build an industrial fish farm in a pristine bay in Downeast?

John Higgins thinks so.

Kingfish Maine, a company based in the Netherlands, has misrepresented its financial ability, Higgins asserted in a detailed analysis of the company which he is sharing with the state Department of Environmental Protection and Maine’s finance authority.

The company’s claim that it has a letter of "commitment or intent to fund" from a financial institution is incorrect, stated Higgins, chairman of Portland-based wealth management firm Clearstead Trust and one of 100 owners of Roque Island across Chandler Bay where Kingfish has sited its farm to raise yellowtail fish.

The letter, from Cooperative Rabobank U.A. in the Netherlands, provided no such commitment, Higgins wrote.

To the contrary, the letter stated that, "A significant portion of this investment will have to be financed by equity" and that Rabobank is interested in further exploring this financing opportunity, "subject to sufficient equity financing being in place.”

“Toward the end of the letter, Rabobank noted starkly that ‘This LOl is for discussion purposes only and does not constitute, and may not be construed as constituting a commitment or an offer to commit to any transaction or financing by Cooperative Rabobank U.A.’ "

In other words, the letter consisted of just standard, boiler plate language used on many such applications.

“The reason for such a weak letter was that the Kingfish NV venture was, and still is, essentially a speculative start-up. The science and technology have not been commercially proven,” Higgins stated.

The QSJ has written numerous articles about Maine’s checkered record of managing industrial fish farms.

Five years ago Whole Oceans purchased the site of an old mill in Bucksport and got all the necessary permits to construct a salmon farm to process 44 million pounds a year. It has yet to break ground.

In Belfast, the state suspended permits for Nordic Aquafarms after it lost a court battle over a disputed easement across a land trust. Its founder and former CEO is now attempting to build a salmon farm using hydro power in Millinocket.

The state in 2022 rejected American Aquafarms’s application to build two salmon facilities in Frenchman Bay but not before it gave its Norwegian founder, a convicted felon, an extraordinary reception as reported by the QSJ.

The only industrial fish farm in operation in Maine, Cooke Aquaculture, was fined $156,000 by the state in 2019 as part of a consent agreement after multiple violations. In 2022, its salmon farms in Puget Sound were closed down by the State of Washington after one of its net pens collapsed and allowed 260,000 non-native salmon to escape in 2017.

Two years ago, 100,000 salmon died in net pens Cooke operates off Black island 10 miles south of MDI from an oxygen deprivation.

Kingfish proposed a land-based farm in Jonesport which requires heavy use of water which would be recirculated in nearby Chandler Bay. Environmentalists have warned about the ill effects of nitrogen pumped into the bay.

Higgins wrote, “Biofiltration to convert ammonia excreted by fish into nitrates, removal of solids excreted by fish, oxygenation of the system water to maintain high production densities, and strict water temperature control, among other processes, have never before been achieved together at scale. Consequently, no meaningful operating history, much less profitability, has ever occurred.”

Higgins also challenged the company’s cost estimate. The total cost of the project was never going to be just $110 million, Higgins wrote. “Indeed Kingfish called this number a minimum. “

“Based on results in the Netherlands, this amount would be enough to fund Phase 1 only, and completion of just Phase 1 would not render the operation profitable. Much more would have to be invested in Phases 2 and 3 to prove commercial viability.”

Like other projects, Kingfish’s biggest hurdle is financing which may be its ultimate downfall as investor appetite for such risk is low in a high interest rate environment. Otherwise, it has all the local and state permits it needs to proceed.