Cermaq freezes investments as resource tax will set Norway back, says Cermaq CEO
Cermaq will freeze investments in Norway as a consequence of the proposal for resource rent tax. “We will wait for more clear understanding of the announcement of last week and the final proposal for the resource rent tax and associated regulations”, states CEO Steven Rafferty
No free licenses in Cermaq
Cermaq does not concur with comments by the Norway Finance Minister that the salmon producers “did not pay for the old licenses.” The owner of Cermaq – Mitsubishi Corporation – acquired the company in 2014 from the principal shareholder, the Norwegian Government, at a market price. Most of the price paid was for the valuation of the licenses. Further growth of Cermaq has been through the license auctions also at market price, only 2 years ago, where the auction price was calculated the current tax regime.
- On acquisition of foreign owned companies, it is often appropriate to factor in a country risk within the acquisition price where there is a volatile economy or a politically unstable environment, where Norway is seen as the opposite. It is hard to believe with hindsight that Mitsubishi should have incorporated a country risk for an economy such as Norway, states Rafferty
Invested the profits in the northern parts of Norway
- The vast majority of profits made in Cermaq Norway since 2014 have been reinvested in our operations. Though Cermaq has large operations also in Canada and Chile, the majority of the funds have been invested in Norway.
For many years, Norway has been the leader in research and development and innovation and also by addressing sustainability and lower carbon emissions through new technologies and large investments in this area.
- There is little doubt the current resource tax proposal will lead to less investment in Norway and more outside of the country. The new regulations if implemented would severely damage the position of Norway as a global leader. After many years working in the global salmon industry, I have referred to Norway as a role model for other salmon countries to follow. This cannot be the case going forward if the proposal is mandated. There are many details of the proposal that will impact Norway’s competitive position as a frontrunning salmon region negatively. It is a pity that a consultation process could not have taken place prior to the announcement of the new tax, says Rafferty
Billion investments frozen
Cermaq has invested more than NOK 5 billion in the two farming regions in Nordland and Finnmark since 2016. The intention was to invest a similar amount in the coming years.
- However, considering the new proposals, we have no choice but to pause, this will naturally impact on growth and job creation in many coastal municipalities in which we operate, says Rafferty
Cermaq Norway employs 680 people in Nordland and Finnmark counties. The company is one of Northern Norway's largest fish farming companies with 4 freshwater facilities, 43 sea facilities and 2 processing plants, as well as a viewing center in Hamarøy. Salmon production is located in Steigen, Hamarøy, Bodø, Narvik and Øksnes municipalities in Nordland, and Loppa, Alta, Hammerfest and Måsøy municipalities in Finnmark.
- As a major employer in these communities, we want to contribute to growth. We planned a new hatchery in Hasvik municipality in Finnmark, creating 30 new jobs, but that project is now on hold, he says.