Legune Station lies on the far north coast of the Northern Territory, perched just east of the West Australian border, where the black clay flats between the legendary Victoria and Keep river estuaries sprawl.
Australia: As jabiru, brolgas and agile wallabies gather in the early morning around two new dams built in the heart of the vast cattle station, 130 kilometres northeast of Kununurra, Seafarms director and company secretary Harley Whitcombe surveys the scene with quiet satisfaction.
The two dams mark the practical start of ambitious Project Sea Dragon, a $2bn dream of the small $98m listed Seafarms Group to build the biggest black tiger prawn farm in the world.
Mr Whitcombe admits he is already starting to visualise the river flats, now dotted with scrub trees and a few wandering white Brahman cattle, covered with the first stage of 1120 hectares of 120 bubbling ponds brimming with juicy high-value tiger prawns destined for high-end consumers in China, Japan and Europe.
It’s an image that many in Australia’s financial world believed would never happen, dismissing the vision and prospectus being pushed globally by Seafarms’ persuasive executive chairman Ian Trahar — well-known for his earlier forays in mining, corporate jets, curtains and carbon farming — as yet another northern Australian pipedream.
But with all environmental approvals and native title deals with traditional indigenous land holders locked away, more than $70m of funding from the NT, WA and federal government to build a year-round sealed road into Legune Station secured, and international buyers and funders circling to grab a share of the massive prawn farm, it now appears possible Project Sea Dragon will indeed fly.
Project Sea Dragon, when fully completed by 2025, aims to produce 150,000 tonnes of black tiger prawns annually, valued at $1.7bn in export earnings from 10,000ha of ponds, making it the largest tiger prawn producer in the world. Prawns will be bred at Seafarms’ dedicated selective breeding program centre in Exmouth, WA, hatched at its special hatchery near Darwin at the rate of 16 million a week, and grown out over six months in the Legune ponds.
The company, which plans to build a $200m prawn processing plant at Kununurra employing more than 200 locals, is also hoping for significant cheap loan funding from the federal government’s $5bn Northern Australia Infrastructure Facility and assistance in developing small and degraded Wyndham port to export its frozen prawns to Asia.
“There’s still a lot of steps to go to get to our first stage of 1120ha of ponds are here, but this is the beginning; we have shown the dams will work and our approvals are all through,” Mr Whitcombe said.
“The next six months will all be about finalising our financial structure and capital raising — there are as many variations about how we do that as you could think of — and we can’t build anything further on Legune until we complete the (rumoured $80m) purchase of the station, which must be before February.”
US-based financial advisers and investment bankers Lazard are managing the funding of the first phase of constructing and operating Project Sea Dragon to about one-ninth of its final size — which will require a significant capital injection or even the sale of the majority of the project.
Mr Whitcombe said several large Japanese and Chinese investors are keen to put $200m-$500m into the project each, some in return for guaranteed prawn supply offtake agreements, while there is also interest from investors linked to Norway’s salmon farming industry and Scandinavian sovereign funds.
The Seafarms Group has already outlaid $72m on the blue-sky project with only its all-important approvals, major project status and two small trial dams to show for it.
Earlier this month it reported a company loss of $19.8m for 2016-17, blamed on its high PSD development costs.
Getting to stage one of building 120 10ha ponds divided into three separate prawn farms for biosecurity reasons by 2019, producing 14,000 tonnes of prawns a year worth $195m, will necessitate the construction of a village for more than 200 permanent workers on Legune, a small modular processing plant at Kununurra that can be expanded, a power plant to supply electricity to aerate the ponds and feed the prawns, and the hiring of 400 construction workers with massive equipment.
Mr Whitcombe said the four directors including himself own 36 per cent of the listed Seafarms — Mr Trahar holds close to 30 per cent — and have told existing shareholders they are not prepared to “give away” either Project Sea Dragon or the listed company, which also owns Australia’s biggest existing prawn farming business near Cardwell, to foreign investors for nothing.