After eight years of planning, plans to establish the world’s largest prawn farm in northern Australia have been shelved. The business behind the idea has deemed the Northern Territory project “not financially feasible” and “unviable in its existing form.” After the gloomy financial outlook was announced late last week, the share price of ASX-listed Seafarms plummeted. Legune Station, a cattle station near the Western Australian border southwest of Darwin, is already building lagoons for Project Sea Dragon. Since 2018, the AAM portfolio has included the 178,870 hectare property through its Pastoral Development Trust.
The Northern Territory government has already committed millions in the project in the hopes of generating the promised 1500 employment. If investors’ interest is maintained, Seafarms wants to continue with a scaled-back version of the prawn farm. Seafarms had planned to create a 10,000-hectare black tiger prawn pond project that would produce 6000 tonnes of prawns per year for roughly $2 billion. The company had big hopes to grow and eventually produce more than 100,000 tonnes of prawns per year.
To support the project, the NT Government funded more than $56 million in road improvements, including modifications to Gunn Point Road, an access road to the Point Ceylon, Bynoe Harbour site, and upgrades to the Keep River Plains Road, ensuring year-round access between Kununurra and Legune Station. On Friday, the business stated that the project’s remoteness was now a concern. “The existing scope cannot be fulfilled for targeted costs or by target completion dates, and the project currently entails unacceptable risk,” Seafarms said in an ASX statement.
According to the government, the project has the potential to create roughly 1500 long-term jobs, with about 1000 of them in the Northern Territory (700 at Legune Station and 300 at a Darwin-based hatchery and breeding facilities, along with a main office in Darwin). The National Native Title Tribunal registered the Indigenous Land Use Agreement for the Legune Grow Out Facility in December 2019, with Native Title Holders using some of the funding to upgrade the Marralum Outstation. “Initiative Sea Dragon is exactly the kind of large project the NT needs,” Chief Minister Michael Gunner remarked at the time. It will bring up to 1500 permanent jobs to the Territory and diversify the economy by bringing a new industry to Australia.
Construction has been halted for the time being until the company’s production strategy can be tested over the following three years. According to Seafarms, a pricing analysis revealed that they would need “substantial” overseas markets for prawns because the project’s remoteness would likely lead to price pressure in the domestic market, making it no longer “viable.” The company cited “expensive logistics and labour costs” as a result of its remote location. In addition, the corporation stated that lower-cost international competitors could capture their targeted market share. Seafarms stated that it still intends to complete the project, but that the cost of production must be reduced.
Customers in Queensland will continue to receive fresh and frozen cooked products. It has a hatchery and grow-out facilities at Flying Fish Point, as well as 148 ponds totalling 160 hectares spread across three farms in Cardwell and Ingham, as well as a processing factory in Cardwell. Legune Station operations will be put on hold until Seafarms completes a farming pilot, which will require additional funding and could take three years to complete.
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