On Friday morning the Outpost sat down with Nordic Aquafarms’ recently appointed interim chief executive officer, Brenda Chandler, at the company’s new office space, located in the former pulp mill facility known as Redwood Marine Terminal II, on the Samoa Peninsula.
As the company gets ready to present its massive land-based fish factory project to the Humboldt County Planning Commission on July 28, executives are seeking to allay any community concerns that may have been triggered by the sudden and unexpected departure of co-founder and President Erik Heim and Executive Vice President/Commercial Director Marianne Naess.
Their unexplained split with the company coincided with the end of a lease on an office that Nordic had been renting on Third Street in Eureka. When people saw that the Nordic sign was gone it fueled yet more rumors that the Norwegian company might be in trouble, putting the project in jeopardy.
But in our interview with Chandler she said the estimated $650 million project is still full steam ahead. Joining us were Project Manager Scott Thompson and independent consultant/community liaison Lynette Mullen. The conversation has been lightly edited for length and clarity.
Lost Coast Outpost: You’ve been named interim CEO. Is there a search for a permanent CEO?
Brenda Chandler: No, not that I’m aware of. [Interim CEO] is the title I was given two weeks ago now.
So there may be a search for a full-time CEO?
I don’t think so. Not right now. But I think, potentially, as we move into a different stage on both of the projects [in Belfast, Maine, and Samoa, Calif.], that’s when there could probably be [a search]. And who knows? Maybe it [will be] me.
Did [getting named interim CEO] come as a surprise to you?
Yeah, it was a surprise. … The leadership in Norway approached me to say, “Can you do interim CEO?” And it’s like, sure. Sure, I can do it.
What level of involvement did you have here in California to that point?
I’ve always been part of the senior leadership as the CFO [chief financial officer], so I’d be party to discussions on updates and all of that on the California project. I worked extensively on the business case for the California project, so all of the components — everything going into the CapEx [capital expenditure] — I would be part of that discussion and those types of things.
Had you been out here before?
Yes. I was here — we were thinking about that — it must have been May 2019 or June of 2019. I was out here with Marianne. We met with a fair number of people … . So yes, I was right at the very beginning of part of those discussions.
And I take it you’ve been doing a series of meetings this trip out as well? Who all have you been meeting with?
Water District, Harbor District, some of the environmentally interested folks. We had a bit of a meet-and-greet with different different folks on Wednesday. … Some people I’d actually met with before, so this was sort of a reintroduction.
And was the the timing of this trip [intended] to allay any concerns [given the recent unexpected departure Heim and Naess]?
Yeah, I thought it was important to get out here as soon as possible. I know the impact that Marianne had, being here basically for a couple of years, and all of the relationships that she had formed. And, really, that led to a great product in the FEIR [Final Environmental Impact Report].
So it was important to be here and basically say, “Hey, we have leadership in place.” But really what’s important, it’s not necessarily the leadership, either. It’s the core of the team, you know, the technical experts that we have. All of that remains the same. …
A leader is all about harnessing all of that, getting everybody going in the same direction. The technical pieces are what you really want to make sure are intact.
You mentioned at the Board of Supervisors meeting on Tuesday that Stephen Sachs is the project lead. When did he take that role with this project?
He actually has been here for over a year. He was hired in April 2021. He’s executive vice president of the projects, essentially, [on] both coasts. … Because of the timing of where we were in the projects his focus had been more on Belfast when he was first brought on. But he technically was hired to cover both coasts, especially around the construction [and] the engineering effort. He would be leading all of that — the environmental pieces, the permitting.
But the way I see it there’s sort of two sides of being here in California, and there was something similar that occurred in Maine as well, where you do have to have somebody who has the time to actually be out there and meeting with the community.
So one half of that is [what] I’m hoping to fill, and the other part is more technical, the hard numbers, the calculations, the planning — all of that is falling back on the project management side.
So I read recently that Nordic is “de-merging” into separate companies, one in Europe and another in the U.S. What’s the purpose of doing that?
Basically what happened is at the beginning of this year they formed a company called NAF Europe and its concentration is going to be on the species kingfish. It also has a major expansion going on in Denmark to build out a bigger facility there for kingfish. So it’s almost concentrated on species, and the market in which it will serve.
The U.S. project is concentrating on salmon. … What they were finding was [that] investors were grappling with, “Oh, I’m interested in kingfish; I’m not interested in salmon.” Or [vice versa].
I read that there’s a Nordic facility that switched plans from [producing] salmon to kingfish because the kingfish has a higher profit margin. I guess it’s used more often in sushi. Was that the reason for investors having a different take on one fish versus the other?
that’s the Fredrikstad facility [in Norway]. That facility was brought up doing Atlantic salmon on land. It’s 1,500 metric tons [in] size, so it’s a much smaller facility [than what’s planned here]. It’s designed slightly different as well.
And so … while they’ve been successful in raising salmon and putting salmon into the European market … it seemed like they would get more efficiency by doing a species that would grow faster and bigger. And so that utilization of the facility would be greater than for Atlantic salmon. But that’s undergoing permitting. That’s the plan, to actually do that conversion. It hasn’t happened yet.
Is there any chance that salmon won’t pencil out here in the states either and there may be a switch to a different kind of fish?
I don’t think so. There’s a lot of market analysis that would be required, and we’ve geared towards Atlantic salmon. Our expertise is in Atlantic salmon, and then the scale of our facilities are such that it makes more sense for it to be Atlantic salmon. The market just generally, if you think about grocery stores, restaurants, I just think there’s more of a potential growth opportunity in Atlantic salmon than kingfish in the U.S.
I saw figures cited recently that the cost estimates for both the Belfast facility and the one here went up to $600 million to $650 million. Is that accurate? And if so, what caused the increase?
Predominantly inflation. The original estimates that we had were a few years old, but I will say those are still preliminary estimates. We have to keep our head around the fact that those were just the very beginning. … What really would fill that out with a more accurate number is a step that still needs to be done … detailed design, where you get a much better number because then every nut and bolt has been accounted for and it’s much deeper. You’ve got bid packages that have gone out to all of the contractors to really get more firm numbers. So that’s work that really needs to still be done — both in Belfast and in Samoa — to really understand that cost. We’re hoping that the wave of inflation actually subsides a little bit.
It’s not just inflation, right? The the supply chain issues have made materials go through the roof.
Right. And it depends on the material as to whether it’s an issue or not.
I saw on an industry website that Nordic’s CEO [Bernt-Olav Rottingsnes] recently said banks are reluctant to lend to land-based fish farming projects. Given the delays that have happened in Maine, the rising cost estimates and the unproven nature of land-based RAS [recirculating aquaculture system] facilities this large — building two simultaneously — has there been any trouble attracting and maintaining investment financing?
First, I’m not sure about his quote and how it was framed. It seems like that was a bit of a soundbite that came through an article.
The direct quote was, “I think it is fair to say the banks still think it is too early to lend to land-based fish farming.”
But yet they have. … You’ve got to frame it and you’ve got to understand the framework, because we actually are able to have loans in Europe. … Now, he may have been referring to at the onset of a project, like in the U.S, but that’s not our strategy. Bank loans are later in the strategy for how do we capitalize our project. The initial phases are going to be through investors, and we have a large investor who has stayed with us the entire time and is still dedicated to us.
That’s Rasmussengruppen [led by CEO Dag Rasmussen]. He’s a major investor.
I think, with the sudden departure of Marianne and Erik, some people are just wondering whether there’s really the money to do this. … Is that a concern?
You can never be 100 percent until the money’s in the bank, right? I mean, clearly it’s an effort. And clearly you have to have investors who can get their brain around it and get behind it. And that’s what we’re working on, is cultivating those kinds of relationships with investors. But we’ve done a lot.
Are you are you seeking any domestic investors? Or is the Rasmussen group financing it to this point?
They are financing it to this point. But yes, to answer your question. Yes. There’s actually U.S. investors and other potential global investors, beyond Norway.
A Lost Coast Outpost reader sent us links to [stories about] challenges that other land-based RAS facilities have had. Most of them were related to [aquaculture company] Atlantic Sapphire. In March of 2020 they experienced a mortality event in one of their grow-out systems [in a Denmark facility], losing around 227,000 fish. A few months after that the company had to initiate an emergency harvest of 200,000 salmon in its Miami facility. And the following March the company had another mass mortality event in the same facility, losing about 500 metric tons of fish — head-on, gutted salmon.
Those types of incidents seem to point to the challenges of growing Atlantic salmon at scale. And Nordic’s plans are even bigger than Atlantic Sapphire’s. How do you know if this is actually feasible at the scale that you’re talking about here?
So remember that our systems are modular, so we’ve proven it. We’ve grown fish; we’ve harvested fish at the Fredrikstad facility, so we’ve proven that we can do Atlantic salmon. So the way to think about the facility, it’s basically building out section by section by section and they’re each managed somewhat independently. So it’s not like one huge tank, right?
I can’t speak to Atlantic Sapphire, but what I will say is [that] we’re located in locations with cold water. Atlantic salmon is a cold water species. And that’s where we’re at on both coasts — seawater, a source of freshwater, and it’s all about the talent, our talent in the engineers and the biologists that we have on our staff.
And by the way, I mentioned this in the Board of Supervisors meeting [on Tuesday], the technical staff that we have in Denmark — we call them “NAF tech” — they actually had a commercial business where they were providing the infrastructure and the design to other customers before they came to work for us. So while it seems like this is big, we’ve already been doing it, actually, all over the world.
Erik Heim, before he parted ways with the company, recently told IntraFish, “As of today, there are a lack of good volume producers of eggs in the United States.” How will that challenge be met both in Maine and here?
The source of eggs that we have is from Iceland, and so it would be imported eggs at this time, which, clearly, for California is something that still needs to be vetted.
Long term are there any plans to get a domestic source?
Well, there’s always the opportunity to look strategically, should that be done? Our focus right now is on getting the permitting done on those farms. And we have a fairly long window of those before we would even get to eggs. It’s still something that’s on the horizon.
A fish biologist acquaintance of mine says that there are incidences of Atlantic salmon and brown trout hybridizing on the East Coast. Those are both in the same genus. But she has been looking through the peer-reviewed literature showing that Atlantic salmon and Pacific salmon are not capable of hybridization. They’re in different genuses. How sure are you that in the extremely unlikely event of an escape, the Atlantic salmon would not be able to reproduce with the native population?
What I’m sure
of is that they’re not going to escape. That’s what I’m sure of. There’s so many layers of of gates and — I mean, there’s physically no way for them to escape alive.
Scott Thompson: Definitely that’s true, with the redundant barriers; even with human error and natural disasters, it’s just not gonna happen.
I’m not the fish biologist, but we do have some references in the FEIR about studies where they have tried under ideal conditions to hybridize these fish and it’s just impossible. The genetic tree is way too far branched at this point that there’s no way.
Lynette Mullen: In addition to that — correct me if I’m wrong, please — but I think there have actually been efforts to intentionally introduce Atlantic salmon to the West Coast that have not been successful. So even when they’ve tried to, these fish still don’t succeed here.
Has the Wiyot Tribe taken a position on the project?
Chandler: I don’t know that we have a letter necessarily from them … but we’ve been in contact with the tribes all along.
Mullen: It’s the three tribes, when you talk about the affected tribes in this area: It’s [the] Blue Lake [Rancheria], it’s [the] Bear River [Band of the Rohnerville Rancheria] and then it’s the Wiyot Tribe on Table Bluff.
I don’t know that you saw, but the Blue Lake Rancheria actually put out a letter of support. It was kind of a big deal for a tribe to come out publicly supporting a project like this. … Really, all of the tribes, the things that they’ve been asking for is assurances regarding environmental impacts. … They want to make sure that things are done well, that there’s no negative impacts, that responsible monitoring takes place to assure them of that.
In very beginning, when Nordic was first coming in, they were very respectful of the fact that this is historic tribal land and wanted to start making those connections, understanding those concerns.
Jamie Roscoe, a well-known archeologist here, was brought on through GHD to do the cultural resources assessment, and what Marianne said at the time, she told Jamie, “Just do this. Meet with tribal leaders.” So Jamie met with the tribal historic preservation officers out here. They walked the site, talked about areas of concern. Nordic stayed out of it completely.
They did borings, they did samplings and that sort of thing. Jamie took that information, wrote up the cultural resources report and then sent it back to the tribal representatives to make sure they were comfortable with what was in that report. … The big thing — and Nordic volunteered to do this; it was kind of a no-brainer — agreed that whenever [the company] starts to go underground, Nordic’s going to supply a cultural resources monitor to be there, so if there’s anything of concern that’s unearthed there’s someone who is qualified to step right in and have that assessed and decide if it’s something significant and other action should be taken to protect those resources.
The Planning Commission hearing is around the corner. Are you aware of any organized opposition to the project?
Chandler: We’re not aware of any. We know there potentially is opposition that will be speaking. But as far as any large organization … we’re really not seeing that.
Thompson: And there are three CDPs [coastal development permits] — one through the county for the upland development but then there’s also one for the outfall [pipe] and the intake [facilities] that are through the California Coastal Commission.
So what’s the best-case-scenario timeline for starting construction?
Chandler: Well, we’re hoping [and] thinking permitting will be done in early 2023. Of course, we don’t know if there will be any appeals — that all just essentially adds time. But assuming the project is clear with all of its permits, we’d have a demolition phase, we’d have that detailed design phase. So we’re into like the 2024 to 2026 timeframe.
Thompson: A big complication to that is just, there’s a lot of birds around the site because the buildings are so porous. It’s unlikely the demolition would start during nesting season. So that kind of leaves us the winter time period. That’s probably when the big stuff will be coming down, because we can’t keep birds from nesting in the buildings that are missing so many pieces.