Brightwater Aquaculture
2009
Altivex 290 (PTY) LTD
2006/000510/07
Altivex
290 (PTY) LTD
Marine Finfish
(Dusky
Kob)
2006/000510/07
Business Plan
l
Contact:
Lyall Welgemoed
Title:
Strategic Director
Cell phone:
+27 (0) 84 434 3168
Fax:
+27 (0) 43 742 0463
Email:
lyall@brightwateraqua.co.za
20 BOTHA ROAD, SELBORNE, EAST LONDON, 5201
January
2013
Brightwater Aquaculture
IMPORTANT NOTICE
This Executive Summary (“Summary”) has been compiled by the management team (the
“Management Team”). This Summary is provided solely for use by recipients (“Recipients”) in
considering the interest of a potential investment in the East London Industrial Development Zone.
This Summary is not a prospectus and does not constitute or form any part of any offer or invitation
to subscribe for, underwrite or purchase securities, nor shall it or any part of it form the basis or be
relied upon in any way in connection with any contract relating to any securities.
The information contained in this Summary is selective and is subject to updating, expansion,
revision and amendment. It does not purport to contain all the information that Recipients may
require. No obligation is accepted to provide Recipients with access to any additional information or
to correct any inaccuracies which may become apparent. Recipients should conduct their own
investigation and analysis of the information contained in this Summary.
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TABLE OF CONTENTS
TABLE OF CONTENTS............................................................................................................................... 3
1
2
3
Introduction & Rationale ................................................................................................................ 5
1.1
Total Funding Required ........................................................................................................... 5
1.2
Business Concept .................................................................................................................... 5
1.3
Market opportunities .............................................................................................................. 6
1.4
Quantifying the current market size ....................................................................................... 7
1.5
The Market Potential .............................................................................................................. 9
1.6
Site Identification .................................................................................................................. 15
1.7
Operational strategies .......................................................................................................... 18
1.8
Job Creation and Value Add to the Province ........................................................................ 19
1.9
Where the Jobs will be created............................................................................................. 25
Business strategy .......................................................................................................................... 28
2.1
High Level Phased Approach to achieve sustainability ......................................................... 29
2.2
Why an integrated Supply Chain Approach .......................................................................... 30
2.3
The Company ........................................................................................................................ 34
2.4
Shareholding and Management Philosophy ......................................................................... 34
2.5
Company Structures.............................................................................................................. 35
2.6
The Overall High level organogram for the venture ............................................................. 37
2.7
Constitution of the Board ..................................................................................................... 39
2.8
Operational Management..................................................................................................... 41
2.9
Strategic Alliances ................................................................................................................. 45
2.10
Project implementation ........................................................................................................ 48
2.11
Identification of High Risk Areas and Mitigation Plans ......................................................... 49
The production process ................................................................................................................ 58
3.1
Hatchery Design .................................................................................................................... 58
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4
5
3.2
Grow-out systems ................................................................................................................. 60
3.3
Operational Attributes .......................................................................................................... 66
3.4
Water quality requirements, abstraction & discharge ......................................................... 69
3.5
Risk Register and Mitigation Plans ........................................................................................ 71
Financial Information .................................................................................................................... 71
4.1
Funding requirements........................................................................................................... 72
4.2
Projected Cost and Returns .................................................................................................. 73
4.3
Net Present Value ................................................................................................................. 74
4.4
Key Ratios .............................................................................................................................. 75
4.5
Income statement ................................................................................................................. 75
4.6
Forecast Balance Sheet ......................................................................................................... 83
Appendices .................................................................................................................................... 84
5.1
Detailed Cash Flows Year 1 to Year 8 .................................................................................... 84
5.2
Farm Construction Quotation ............................................................................................... 85
5.3
Shareholder CV’s ................................................................................................................... 86
5.4
Shareholder Declarations...................................................................................................... 87
5.5
Shareholder Agreement........................................................................................................ 88
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This business plan executive summary is presented for the development of a marine aquaculture
(mariculture) dusky kob (Aryrosomus japonicus) farm to be based in the Industrial Development
Zone of Buffalo City, Eastern Cape. The facility aims to produce dusky kob using on-land recirculating
aquaculture systems which operate on a 10-15% daily exchange rate of clean seawater. The farm will
be a scalable mariculture venture that will harvest 500 tons within the first four years after which
time the facility will be expanded to produce +1 000 tons per year by year six and 1500 tons per
annum by year 9. Our wish is to increase production to 2000 tons within a 10 year.
1
Introduction & Rationale
1.1 Total Funding Required
A total of R 79.5 million, subject to a 10% variance, is required to capitalise the venture. In terms of
cost per jobs over the five year period it will mean 791 jobs created at an average cost of R100 000
per job created.
1.2 Business Concept
The current poor state of the natural fishing stocks has resulted in dwindling catches worldwide.
This has created a shortfall in the availability of seafood worth more than R660 billion globally and
more than R700 million nationally. As a result, it is has created an opportunity for the deficit to be
supplied from marine aquaculture (mariculture) farms such as that proposed by Brightwater
Aquaculture. This business plan thus motivates for the development of a mariculture dusky kob
(Argyrosomus japonicus) (also known as kabeljou) grow-out facility to be based in the East London
(Buffalo City) Industrial Development Zone (ELIDZ), Eastern Cape. The ELIDZ has a designated
mariculture zone within which the facility will be constructed. The facility aims to produce market
size dusky kob using on-land recirculating aquaculture systems.
The farm will be a scalable
mariculture venture that will initially produce around 500 tons per year, ramping up production to
+1 000 tons over a period of 5 years. Plans are to operate a hatchery however due to legislation
restricting farming and abattoirs from being immediately adjacent to one another, there is no plan
to incorporate a processing facility. After harvesting, fish will therefore be processed offsite.
The facility will utilise recirculating aquaculture systems technology with a 10 - 15% volume
replacement per day made up from sea water being supplied by the ELIDZ seawater supply line. All
EIA requirements have been fulfilled by the ELIDZ thereby allowing Brightwater Aquaculture to begin
construction as soon as all building plans have been approved. The ELIDZ have already granted
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Brightwater Aquaculture approval for developing the facility within the mariculture zone as well as
the first right of refusal on the two adjacent erfs which will be used for future expansion to +1 000
tons.
Brightwater Aquaculture is in the process of finalising technical agreements via Finance Competence
for a technical partnership with one two European Union Fish Farms for the following services:
1. Technical Design
2. Build Management
3. Operational Implementation and management
4. Training and Development of Staff
5. Marketing and Sales of Product
This relationship is based on an equity deal between the parties. The use of accredited, well
established organisations within the European Union is seen as a vital risk mitigation strategy as the
current industry in South Africa is not mature enough to mitigate failure risks being experienced in
the industry at present.
The contact details for our representative are as follows:
Lars Hedstrom
www.financecompetence.eu
lars@hedstrom.cc
An example of a further local uptake agreement plus one of the international uptake agreements
can be found in section4.5.1.1Letter of intent:
1.3 Market opportunities
The Food and Agriculture Organisation’s (FAO's) latest flagship publication on the state of fisheries
and aquaculture, The State of World Fisheries and Aquaculture 2012, was launched at the opening
of the 30th session of the FAO Committee on Fisheries. This document highlights the sector's vital
contribution to the world's well-being and prosperity, a point reflected in the recent Rio+20
Outcome Document.
The State of World Fisheries and Aquaculture 2012 reveals that the sector produced a record 128
million tons of fish for human food - an average of 18.6kg per person providing more than 4.3 billion
people with about 15 percent of their animal protein intake. Fisheries and aquaculture are also a
source of income for 55 million people.
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The report notes that many of the marine fish stocks monitored by FAO remain under great
pressure. According to the latest statistics available, almost 30 percent of these fish stocks are
overexploited - a slight decrease from the previous two years, about 57 percent are fully exploited
(i.e. at or very close to their maximum sustainable production) and only about 13 percent are nonfully exploited.
1.4 Quantifying the current market size
Dwindling natural fishing stocks have resulted in a global shortfall in the availability of seafood
worth more than € 70 billion annually. Fish farms produced 51.7 million tons of fish worldwide in
2006 with an estimated value of $78.8 billion, according to figures from the U.N. Food and
Agriculture Organization (FAO). These farms accounted for 70% of total growth in food fish
production from 1985-2004 and currently supply over 50%, or 70 million tons, of the fish consumed
globally. Aquaculture plays a major role in global fish supply, thanks to developments in rearing and
processing technologies. Catches of wild fish levelled off in the 1980s, yet between 1973 and 2003
world fish consumption doubled. Between 2000 and 2005 world aquaculture production increased
by one third – largely due to spectacular growth in Asia and South America.
Capture fisheries and aquaculture supplied the world with about 148 million tons of fish in 2010,
with a value of US$217.5 billion of which about 128 million tons was utilized as food for people, and
preliminary data for 2011 indicate increased production of 154 million tons, of which 131 million
tons was destined as food Production.
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FAO: THE STATE OF WORLD FISHERIES AND AQUACULTURE 2012
2.1.1 International Trade in Fish and Fishery Products
“Fish and fishery products are highly traded, with more than 37 percent (live weight equivalent) of
total production entering international trade as various food and feed products.” (SOFIA 2008)
Fish and fishery products are among the most-traded food commodities worldwide. Following a
drop in 2009, the world trade in fish and fishery products has resumed its upward trend driven by
sustained demand, trade liberalization policies, globalization of food systems and technological
innovations. Global trade reached a record US$109 billion in 2010 and 2011 points to another high
estimated at US$125 billion. (FAO: The State of World Fisheries and Aquaculture 2012). Anderson,
Asche and Tveteras (2008) credit the following factors with growth in seafood trade:

Improvement in transportations and logistics

Progress in conservation technology

Aquaculture provides “commodities” for international supply chains

Several institutional changes that have promoted trade, for example, a 200 mile Exclusive
Economic Zone (EEZ) in 1977 (GATT)

Total seafood production has continued to grow, increasing the supply available for trade
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1.5 The Market Potential
"There is no question -- aquaculture is the way of the future"
Marshall Gilles, head of the Canadian government's agriculture and fishery division, adding that
farmed fish will probably account for 60 percent of available world stocks by 2030.
Worldwide, aquaculture has grown at an annual compounded rate of 9.2% per annum since 1973,
and is projected to grow at 4.5% per annum until 2030 (Brugère & Ridler, 2004). Increased demand
for finfish is expected to cause the price of high-value fish to increase by 15% in real terms by 2020
(Delgado et al., 2003), while that for other meat products will decline slightly. Historical price trends
demonstrate the increased value placed on fish products.
FAO Fish Price Index
Since capture fisheries cannot meet the demand due to dwindling wild stocks that will limit wild
capture fisheries to approximately 80 million tons per annum, aquaculture will have to play a pivotal
role. This has created an opportunity for the deficit to be supplied by marine aquaculture farms.
With sustained growth in fish production and improved distribution channels, world fish food supply
has grown dramatically in the last five decades outpacing the increase of 1.7 percent per year in the
world’s population. World per capita food fish supply increased from an average of 9.9 kg (live
weight equivalent) in the 1960s to 18.4 kg in 2009, and preliminary estimates for 2010 point to a
further increase in fish consumption to 18.6 kg. Of the 126 million tons available for human
consumption in 2009, fish consumption was lowest in Africa (9.1 million tons, with 9.1 kg per
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capita), while Asia accounted for two-thirds of total consumption, with 85.4 million tons (20.7 kg per
capita), of which 42.8 million tons was consumed outside China (15.4 kg per capita), which makes
aquaculture the fastest growing agro business.
The diagram below illustrates a significant refocus from dwindling wild fish stocks to the production
of aquaculture stocks throughout the world.
68%
Projection to 2020
32%
Aqua-culture
Capture
31%
Fish Production 1997
0%
69%
50%
100%
Share of Aquaculture in Fish Production 1997 and the increase from 1997-2020 Baseline Scenario.
Source International Food Policy Research Institute, 2005
The world population is expected to increase to 9 billion. (Torgeir Edvardsen, European Aquaculture
Technology and Innovation Platform) Given the projected population growth, demand will reach
approximately 170 to 180 million tons of aquatic food by 2030 to maintain current per capita
consumption. With an emerging middle class in developing countries and a growing awareness of
the health benefits of marine finfish, demand is expected to increase dramatically. An example is
the European Union. This sophisticated fish market based on a strong middle class, produces 1.2
million tons of seafood and consumes 25 kg (55 lb) per person per year on average (well above the
global average of 18.5kg’s), and has to import 65 percent of its needs. Massive market potential
resides in the ascendancy of the middle class population within the BRICS states. In conjunction with
bilateral trade agreements and security of supply, aggressive awareness campaigns will dramatically
increase demand for quality finfish, especially saltwater fish which have superior health benefits to
other sources of protein.
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Dusky kob is considered to be one of South Africa’s premium eating linefish and the local market is
currently estimated to be in the region of 4000 to 6 000 tons annually (Oceans Edge Trading (Pty)
Ltd, Cape Town). As many of the current fisheries species become increasingly difficult to obtain, it
is expected that the market for dusky kob will grow due to the neutral taste and white flesh of the
fish. This market may initially be considered as a substitute to the likes of hake but as aquaculture
production increases, it is likely to eventually be desired as the first choice. Per capita fish
consumption has risen in South Africa in the last couple of years (Failler 2007) and the emergence of
a new black middle class in South Africa with an expendable income suggests more people have
excess income to spend on better, healthier food.
Current retail prices of dusky kob in local supermarkets are in the region of R80 to R130 /kg which
after marketing and processing fees will realise an equivalent live weight farm gate price of between
R60 and R75 per kg in 2013.
An existing “white tablecloth” market for dusky kob already exists in Australia (where it is called
mulloway) and the Sydney Fish Market 2008/09 prices for farmed mulloway was around AU$9.37
/kg. According to a marketing survey by Synovate Business Consulting on behalf of the Australian
Aquaculture Development Council, the 2007 farm gate prices for mulloway were between AU$10.20
and AU$11.00 /kg (Head on, Gilled & gutted) and AU$20.90 /kg for filleted fish. Australian mulloway
exported to the USA were fetching equivalent farm gate prices of US$11.05 /kg (Head on, gilled &
gutted) to US$28.05 /kg for fillets.
Cultured Mulloway obtained good acceptance with chilled whole / gilled – gutted fish
with prices around $10 per kg. The fish were found to be moist, tender with a white flesh
free of off-flavours and low in fat. Fillet recovery was high at 52 per cent with the rib
cage removed. With most Australian consumers preferring white fleshed fish with few
bones and a mild flavour, cultured Mulloway can meet these consumer preferences,
indicating that a substantial market should exist for this product.
www.pir.sa.gov.au/factsheets: Mulloway aquaculture in South Australia
1.5.1
Fish replacing Beef as a source of protein
The world quietly reached a milestone in the evolution of the human diet in 2011. For the first time
in modern history, world farmed fish production topped beef production. The gap widened in 2012,
with output from fish farming—also called aquaculture—reaching a record 66 million tons,
compared with production of beef at 63 million tons. And 2013 may well be the first year that
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people eat more fish raised on farms than caught in the wild. More than just a crossing of lines,
these trends illustrate the latest stage in a historic shift in food production—a shift that at its core is
a story of natural limits.
As the global demand for animal protein grew more than fivefold over the second half of the
twentieth century, humans began to press against the productivity constraints of the world’s
rangelands and oceans. Annual beef production climbed from 19 million tons in 1950 to more than
50 million tons in the late 1980s. Over the same period, the wild fish catch ballooned from 17 million
tons to close to 90 million tons. But since the late 1980s, the growth in beef production has slowed,
and the reported wild fish catch has remained essentially flat. (See data.)
The bottom line is that getting much more food from natural systems may not be possible. Much of
the world’s grassland is stocked at or beyond capacity, and most of the world’s fisheries are fished to
their limits or already crashing. Overstocked rangelands become obvious as the loss of protective
vegetation leads to soil degradation, which at its worst can cause punishing dust and sand storms.
Overexploited fisheries are less readily visible, but fishing patterns over time reveal that more effort
is required to achieve the same size catch as in years past. Boats are using more fuel and travelling
to more remote and deeper waters to bring in their haul. Fishers are pulling up smaller fish, and
populations of some of the most popular food fish have collapsed.
Historically, people’s taste in eating animal protein was largely shaped by where they lived. In places
with extensive grasslands, like in the United States, Brazil, Argentina, and Australia, people
gravitated toward grazing livestock. Along coasts and on islands, as in Japan, wild fish tended to be
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the protein staple. Today, with little room for expanding the output from rangelands and the seas,
producing more beef and fish for a growing and increasingly affluent world population has meant
relying on feedlots for fattening cattle and on ponds, nets, and pens for growing fish.
While open waters and grasslands can be self-sustaining if managed carefully, raising fish and
livestock in concentrated operations requires inputs. Grain and soybeans have been inserted into
the protein production food chain. Cattle consume 7 pounds of grain or more to produce an
additional pound of beef. This is twice as high as the grain rations for pigs, and over three times
those of poultry. Fish are far more efficient, typically taking less than 2 pounds of feed to add
another pound of weight. Pork and poultry are the most widely eaten forms of animal protein
worldwide, but farmed fish output is increasing the fastest. Average annual growth rates over the
last five years have mirrored the relative efficiency of feed use, with the global production of farmed
fish growing by nearly 6 percent a year, poultry by 4 percent, and pork by 1.7 percent—fast
outpacing beef, which barely increased at all.
As grain and soybean prices have risen well above historical levels in recent years, the cost of
producing grain-eating livestock has also gone up. Higher prices have nudged consumers away from
the least-efficient feeders. This means more farmed fish and less beef. In the United States, where
the amount of meat in peoples’ diets has been falling since 2004, average consumption of beef per
person has dropped by more than 13 percent and that of chicken by 5 percent. U.S. fish
consumption has also dropped, but just by 2 percent.
Beyond economic considerations, health and environmental concerns are also leading many people
in industrial countries to reduce their beef intake. Meanwhile, fish are touted as healthy alternatives
(save for the largest types, which have accumulated mercury from environmental pollution). Diets
heavy in red meat have been associated with a higher risk for heart disease and colon cancer, among
other ailments. Beef production has garnered a negative reputation for having a large carbon
footprint and for destroying habitat, notably in the Brazilian Amazon. And excess nitrogen fertilizer
applied to the fields of feed corn grown to satisfy the world’s livestock runs off into streams and
rivers, sometimes flowing to coastal waters where it creates large algal blooms and low-oxygen
“dead zones” where fish cannot survive.
While it is only recently that the limitations of natural systems have emerged on a global scale, the
practice of aquaculture dates back millennia. China, which accounts for 62 percent of the world’s
farmed fish, has long cultivated different types of carp that eat different things—phytoplankton,
zooplankton, grass, or detritus—together in a mini ecosystem. Today carp and their relatives are still
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the mainstay of Chinese aquaculture, making up nearly half the country’s output. Filter-feeding
mollusks, like clams and oysters, account for close to a third. Carp, catfish, and other species are also
grown in Chinese rice paddies, where their waste can fertilize the grain crop. This is also practiced in
Indonesia, Thailand, and Egypt. (Other top aquacultural producers include India, Viet Nam, and
Bangladesh.)
Unfortunately, not all aquaculture works this way. Some of the farmed fish that are quickly gaining
popularity, like salmon and shrimp, are carnivorous species that eat fishmeal or fish oil produced
from forage fish from the wild. Yet most forage fish stocks (think anchovies, herrings, and sardines),
which typically make up about a third of the world oceanic fish catch, are dangerously
overharvested. Fish farmers are working to reduce the amount of fish meal and oil in their rations,
but in the rush to meet ever-expanding world demand, the share of farmed fish being fed has
increased because they can reach market size quickly. Norway, the world’s top farmed salmon
producer, now imports more fish oil than any other country. China, the world’s leading shrimp
producer, takes in some 30 percent of the fishmeal traded each year.
As cattle ranches have displaced biologically rich rainforests, fish farms have displaced mangrove
forests that provide important fish nursery habitats and protect coasts during storms. Worldwide,
aquaculture is thought to be responsible for more than half of all mangrove loss, mostly for shrimp
farming. In the Philippines, some two thirds of the country’s mangroves—over 100,000 hectares—
have been removed for shrimp farming over the last 40 years.
Another problem with intensive confined animal feeding operations of all kinds, whether for farmed
fish or for cattle, is not what gets extracted from the environment but what gets put in it. On a smallscale farm with livestock, animal waste can be used to fertilize crops. But putting large numbers of
animals together transforms waste from an asset into a liability. Along with the vast quantities of
waste, the antibiotic and parasite-killing chemicals used to deal with the unwanted disease and
infestations that can spread easily in crowded conditions also can end up in surrounding ecosystems.
The overuse of antibiotics in livestock operations can lead to antibiotic-resistant bacteria,
threatening both human and animal health. In the United States, for instance, 80 percent of
antibiotics use is in agriculture—and often not for treating sick animals but for promoting rapid
weight gain.
Thus the solutions to our collision with the limitations of the natural systems that have long provided
food have created their own host of problems. On a per person basis, beef consumption—now
averaging less than 20 pounds (8.9 kilograms) each year globally—is unlikely to rebound to the 24
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pounds eaten in the 1970s. But annual world fish consumption per person of 42 pounds—up from
25 pounds in the 1970s—is set to keep rising. With the additional fish coming from farms rather than
the seas, the urgency of making aquaculture sustainable is clear. On the fish feed front, fishmeal
producers are incorporating more seafood scraps into their products; today roughly a third of
fishmeal is made up of food fish trimmings and other by-products. And some fish farmers are
substituting livestock and poultry processing wastes and plant-based feeds for fishmeal and oil,
which does not sound particularly appetizing, but does reduce pressure on wild stocks. From a
sustainability standpoint, however, it would be preferable to shift the balance back in favor of
farmed fish raised without feeds based on food grains, oilseeds, and protein from other animals.
Our global population of 7 billion people, growing by nearly 80 million per year, cannot
escape the limits of nature. To live within Earth’s natural boundaries requires rethinking
meat and fish production practices to respect ecology. Most important, it means
reducing demand by slowing population growth and, for those of us already living high
on the food chain, eating less meat, milk, eggs, and fish.
1.6 Site Identification
The site identified will be within the East London Industrial Development Zone in Buffalo City. The
ELIDZ has obtained the necessary rezoning for mariculture and at present has both abalone and
dusky kob aquaculture operations within the ELIDZ.
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1.6.1
Industrial Development Zone
The IDZ programme, which is part of the national government’s strategy to position the country
within the global economy, aims to provide a location for strategic investments which encourage
economic growth through the export manufacturing industries. Located in the Eastern Cape, South
Africa’s second largest province and one of its most scenically beautiful, the East London IDZ is a
world-class 430 hectare industrial park and the country’s first operational zone.
The East London Industrial Development Zone (EL IDZ), one of the country’s leading specialised
industrial parks, is located in Buffalo City, the municipal area which also incorporates Bhisho, the
province’s capital and King William’s Town. It is the first of four IDZs in South Africa to be operational
and represents an ideal choice for the location of exported manufacturing and processing. Its
location provides investors with connections to major markets, locally and across the globe.
The IDZ is uniquely situated with access to Air, Road, Rail and Port facilities that will allow for the
logistical movement of both inputs and product transportation to destinations nationally and worldwide.
The EL IDZ is best suited to develop a marine aquaculture cluster. EL IDZ already has an established
abalone farm representing over 5 years of research and experience in farming abalone. The EL IDZ
has access to good quality sea water which it aims to make available to its tenants. It also possesses
among the most ideal sites for the establishment of finfish grow-out facilities as temperate waters
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lend themselves to good growth rates for fish such as dusky kob. The EL IDZ is also in close proximity
to Africa’s leading mariculture research department, the Department of Ichthyology & Fisheries
Science, Rhodes University in Grahamstown. The ELIDZ actively supports the establishment of
mariculture and has is currently focussed on actively attracting investment into the IDZ in the form
of aquaculture.
1.6.2
ELIDZ site identification and confirmation
Following discussions with the ELIDZ and specifically their representative Zwelethu Mhlope, the
following sites have been reserved for the venture:
1. erf 60888 is approximately 4,1618ha (±41 618m2)
2.
erf 60886 is approximately 3,6593ha (±36 593m2)
1.6.2.1 Copy of Email from ELIDZ confirming sites
From:
Sent:
Zwelethu
04
To:
Mhlope
November
[mailto:Zwelethu@elidz.co.za]
2009
Lyall
04:14
PM
Welgemoed
Subject: RE: Confirmation of Site Availability for Mariculture Venture
Hi Lyall,
Thank you for the interest shown in the ELIDZ. We look forward to assisting you in establishing your
business venture at the ELIDZ.
Regarding your questions below:
1. The rental per square metre is determined by the contents of your business plan, as the ELIDZ
offers incentives based on how the business meets the mandate of the ELIDZ. However, for
the purposes of calculating the financial implications of the proposal, you may utilise a figure
of R 1,50/m2/month. Further, add a zone levy of approximately R 0,25/m2/month.
2. The size of the sites is as follows, erf 60888 is approximately 4,1618ha (±41 618m2) and erf
60889 is approximately 3,6593ha (±36 593m2).
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I hope that the above information is useful at this preliminary stage.
Kind Regards,
Zwelethu
Zwelethu Mhlope
Sector Manager
East London IDZ Pty (Ltd) P O Box 5458 Greenfields 5208
Office:+27 43 702 8245 • Fax:+27 43 702 8251 • Mobile:+27 82 953 9714
Email: zwelethu@elidz.co.za • www.elidz.co.za
1.7 Operational strategies
The Brightwater Aquaculture kob growout facility has been designed to initially produce
approximately 500 tons of fish per year with the infrastructural implementation for an incremental
role out to 1500 tons in year 9. The planning and construction phase of the project is anticipated to
take between 12 and 14 months after which time production will begin. Fingerlings will initially be
purchased from Pure Ocean Aquaculture’s hatchery and transported to the Brightwater Aquaculture
facility where they will be quarantined before being introduced to the growout facility. To ensure
that a consistent supply of market size fish are available, a new batch of fingerlings will be added
every three months or as required. Once Brightwater Aquaculture’s management is comfortable
operating the 500 ton facility, the intention is to rapidly expand it to +1 500 tons on the adjoining
sites. We envisage that the start of the phase 2 construction period would be a minimum of three
years after the 1st turning of sods. Full (+1 500 ton) production would therefore only begin at the
earliest, in year four with the first full-capacity harvest occurring during year six.
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Fish will be maintained in tanks (50m3 volume) connected to a recirculating system comprising of
drum filters, biological filters, protein skimmers, oxygen addition and CO2 stripping. As they grow
they will be regularly graded and moved through the facility until they are eventually harvested and
bled before being sent for processing. Specifically formulated food pellets are fed to the fish, the
amount of which is adjusted daily as they grow. The entire facility will adhere to strict biosecurity
principals and procedures in an effort to prevent the introduction of disease onto the farm or should
this happen, reduce the spread on the farm.
Although indications are that the market would prefer larger fish which yields a larger fillet,
Brightwater Aquaculture intends generating much needed cashflow by marketing some fish sooner.
The current production model aims to grow a proportion of fish to 1kg (in about 12 months from
fingerling) with the remainder growing to 2.5kg (in about 18 months from fingerling). This means
that an absolute minimum period of two years (planning, construction and production to 1kg) would
pass before there was any positive cashflow entering the company. Once production is continuous,
the ratio of 2.5kg to 1kg fish will increase to best provide the markets needs.
Fulltime staffing of the grow-out facility would include four senior managers (General, Life-support,
Production and Financial), and approximately thirty junior staff (reception, cleaning, fishfarm
labourers etc). Managers would be expected to be available for after hours standby as well as
weekend duties.
1.8 Job Creation and Value Add to the Province
The project will create a total of 791 jobs over the first five years of its existence. This is broken
down as follows:
Direct Farm Jobs Created: 226
Industry jobs created: 565
The investment in the fish farm industry will result in exponential ancillary job creation in other
industries because of the following reasons:
1. The mariculture industry is new, it is not an established industry with established suppliers.
This will result in new businesses being created to supply goods and services to the farm
throughout its supply chain.
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2. The mariculture industry will positively impact the development of new skills as people will
need to be trained, skilled and capacitated to both work on the farm as well as supply goods
and services to it.
3. Tertiary institutions, of which we have a research and development agreement with Rhodes
University, will benefit from having on job training facilities as well as live research and
development opportunities. This will allow the industry, through the transfer of knowledge
at the farm, to expand and create new farms and thus jobs.
The supply chain will be needed to be developed and business and job opportunities will be created
in the following areas:
1. Construction – construction techniques and long term build opportunities will impact on the
number of direct construction jobs as well as material suppliers in the local economy.
2. Fish Feed Inputs– the fish feed that will be needed to supply the farm will be needed to be
grown within agriculture. A large soya, animal protein and carbohydrate market will
developed to supply the ingredients for the fish feed locally.
3. Fish Feed Production – a new business opportunity will be developed to manufacture and
supply fish feed to the fish farm. This will require new skills to be developed and new jobs
being created.
4. Logistics – the transportation of both fish feed and the fresh fish will be needed to be set up
as both distribution networks are specialised and are in their infancy in the region. This will
impact positively on job creation.
5. Equipment, plant and operational materials – the equipment needs to be manufactured and
maintained locally. Operational materials such as oxygen needs to be produced and supplied
locally to the farm. This will create employment and training opportunities.
The jobs will be added as follows:
1.8.1
Year 1:
The Development plan for year 1 is highlighted below:
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Brightwater Aquaculture
In year 1 a total of 55 on farm jobs will be created, whilst associated industry jobs in terms of
construction, feed supply, equipment and plant manufacture and supply and Tertiary Education will
add a further 245 jobs. The total jobs created in year 1 will be 300.
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Brightwater Aquaculture
1.8.2
Year 2
In year 2 a total of 34 additional on farm jobs will be created, whilst associated industry jobs in terms
of construction, feed supply, equipment and plant manufacture and supply and Tertiary Education
will add a further 48 jobs. The total jobs created in year 2 will be 89. The cumulative job creation will
be 380.
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Brightwater Aquaculture
1.8.3
Year 3
In year 3 a total of 14 additional on farm jobs will be created. The total jobs created in year 3 will be
14. The cumulative job creation will be 386. The third year is about the consolidation of the first crop
and preparation for expansion in year 4.
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Brightwater Aquaculture
1.8.4
Year 4
In year 4 a total of 45 additional on farm jobs will be created, whilst associated industry jobs in terms
of construction, feed supply, equipment and plant manufacture and supply and Tertiary Education
will add a further 243 jobs with the majority of jobs being created in the agricultural and services
sector. The total jobs created in year 4 will be 359. The cumulative job creation will be 745.
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Brightwater Aquaculture
1.8.5
Year 4
In year 5 a total of 11 additional on farm jobs will be created, whilst associated industry jobs in terms
of construction, feed supply, equipment and plant manufacture and supply and Tertiary Education
will add a further 29 jobs with the majority of jobs being created in the agricultural and services
sector. The total jobs created in year 4 will be 46. The cumulative job creation will be 791.
1.9 Where the Jobs will be created
The following diagrammatically represent in what areas other than the fish farm jobs will be created:
1.9.1
Farm Build and Development
The following areas will add jobs to local economy as a direct result of the construction of the fish
farm. As the farm will be continuously upgraded and improved the jobs created will be on a cyclical
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basis. We will at all times utilise BEE contractors with the implicit condition of EPWP labour
practices.
1.9.2
Fish Feed and Farm Maintenance
The high demand for fish feed will allow for the increased agricultural activity to be sustainable in
the local economy. The volumes required for the farm will also allow for a sustainable feed
manufacturing facility to be developed.
Maintenance on the farm will be ongoing and this will result in long term contracts being entered
into and thus sustainable job creation.
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1.9.3
Crop Distribution and Value Added Services
Ancillary job creation will result from the logistical requirements of distributing large volumes of
fresh fish, both locally and overseas. Specialised logistics will need to developed thus creating new
job creation opportunities.
Added Value services such as filleting and smoking will allow for a manufacturing plant to be
established. Added to this the need for packaging and marketing will create sustainable jobs in the
local economy.
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2
Business strategy
The approach to the implementation of the project will be based on a phased approach which will be
borne out in the costings. The different phases will identify both growth potential and supply chain
integration opportunities.
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Brightwater Aquaculture
2.1 High Level Phased Approach to achieve sustainability
The strategy for the company is to develop a sustainable, integrated organisation that can become a
major role player in the mariculture industry within 8 years of starting production.
Initial effort and investment will be aimed at producing a 500 ton yield utilising purchased fingerlings.
The purchase of fingerlings will reduce the company’s return on investment for the first two yields.
This is unfortunately necessitated by the fact that the broodstock needs to be captured from the wild
and settled in the tanks for a period of one year before they can be manipulated to spawn in captivity.
However, the costing of the hatchery will be included in the initial project implementation as we see
this as a vital research opportunity for Rhodes University and ourselves to ensure maximisation of
reproductive efforts going forward. The approach will also secure better medium and long-term
returns on investment with a ‘fingerlings sales’ diversification aspect.
Once the facility and grow processes are well established and the first year yield is considered secure,
the business will begin the process of fully establishing the hatchery. This will be integrated into the
existing processes and structures of the business in such a way as to ensure logical, practical
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workflows. Each phase of the business strategy will be incorporated into the business plan and all
infrastructure work will be approached on the basis of final integration and expandability. This will
ensure that work done will not have to be redone at a later stage to accommodate the next range of
required structures.
Once the hatchery and grow processes are established to the degree that assurance of a product from
broodstock to saleable fish is likely, the process of defining the size and structure of a processing
facility will commence. The establishment of the processing facility will require a full feasibility study
incorporating demand and cost factors, and this phase will only move forward on a favourable
outcome of the study. Should a full scale facility not be considered feasible, an in-house processing
and packaging process will be considered for integration into the business structure. A similar process
will be undertaken to establish the way forward with the feedstock processing and supply plant. We
are certain a business case will be developed for both the processing and feedstock plants based on
the obvious supply chain benefits for the company, but accept that a full review will have to be made
once the core business activities have been established and tested.
The long term objective of the strategy is for the business model to be an end-to-end mariculture
based producer and wholesaler of South African dusky kob, providing both local and foreign markets
with a high quality product. The ethos of the business will include meticulous attention to quality,
cleanliness and ensuring acceptability in terms of local and foreign quality control standards. From the
onset the company will be structured to portray the image of a world class supplier both as a means
toward standards maintenance and in an effort to showcase South African best practice in the
mariculture arena
2.2 Why an integrated Supply Chain Approach
Historically state provision of land and the creation of an enabling statutory environment for the
development of individual aquaculture projects have not yielded the success that was anticipated.
The main contributing factors towards this have been:
1. The development of small farms has led to variations in the quality produced.
2. A guaranteed consistent supply has not been achieved.
3. Smaller producers have not been able to establish either a brand or product awareness over
a large enough geographical region to ensure continued support for the product. Coupled
with variations in the quality and consistency of supply, this has hindered the establishment
of a co-ordinated finfish marketing drive able to rival that of other well established protein
sources such as red and white meat.
4. Reliance on traditional wild caught industry rather than new technologies.
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5. Key developmental infrastructure success factors such as electrical supply and physical
logistical infrastructure have not been geared to the development of the aquaculture
industry.
Thus the sustainability of this industry will rely on integrated planning and management. The
following key success factors must be addressed in order to create an economic asset that South
Africa can rely on for growth into the future:
1. Integrated development planning - To ensure the development of a tangible brand the
focus needs to be on the entire supply chain within the finfish/aquaculture industry.
a. Human Resources –skilled, local labour will be required to manage both the
production of large scale aquaculture and its supply chain. The development and
accreditation of relevant tertiary qualifications is necessary, not only in order to
meet the skills requirements of the industry, but to position Oman as a global
research and development leader.
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b. Logistical Capabilities –the best price and brand leverage can be obtained at the
middle to upper level of the fish/aquaculture consumption market. To meet the
expectations of this market segment, the farmed product will need to get to the end
user extremely quickly. Logistics capabilities will need to be upgraded and scalable
in order to meet production and market requirements. Therefore, the positioning of
farms, and the internal logistics capabilities and capacities need to identified and
addressed.
2. The support of national government to secure forward contracts with various nations will
be critical to the sustainability of the industry:
a. Market security - bi-lateral and multi-lateral agreements will need to be secured
with the governments of identified target markets. It is possible that existing fossil
fuel relationships could be leveraged. New opportunities for trade agreements with
both supplier and end users. Examples of these include:
i. Agreement with China for example for the supply of building materials and
green technologies for uptake agreements for South African full production.
ii. Technology transfers from Europe and Africa in return for research and
experiential training agreements on Omani farms.
iii. Food Security agreements regionally with.
b. Zero rating of imports for the construction and management of the facilities.
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Brightwater Aquaculture
The Implementation Timetable
Year 1
Month 12
Year 2
Month 24
Year 3
Month 36
Year 4
Month 48
Year 5
Month 60
Year 6
Month 72
Funding
approval
Hire Staff
Finalise designs
PHASE 2
Construction
PHASE 1
Planning
& Design
Start – Year 0
Month 0
Earthworks
Construction
Build hatchery
PHASE 3
Production
Test systems
Production (500 ton facility)
Collect broodstock
Spawn own broodstock
Identify alternative markets
PHASE 4
Expansion
Earthworks
Construction
Test systems
SEPARATE
FUNDING
REQUIRED
PHASE 5
New ventures
Production (+1 000 ton facility)
Investigate new potential species
Investigate viability of processing facility
Investigate viability of feed plant
The Business Plan is built on securing multiyear funding for the activities highlighted in blue. The
accessing of multiyear funding will be based on the farm meeting its financial and production targets
as laid out in the financial plan. The proposed funding structure will also serve to hedge against
unforeseen critical failure factors by exposing only portion of the capitalisation funding at any given
time. We do however believe that industry, business and operational risks are all identified,
understood and manageable and that the business has a high success probability. Where pertinent,
conservative figures and forecasts have been used in the financial modelling to best manage failure
risk.
We envisage the following production growth arc that is accounted for in the financial information
attached:
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Brightwater Aquaculture
Tonnage Produced
1,600.00
1,400.00
1,200.00
1,000.00
800.00
600.00
400.00
200.00
0.00
Yr1
Yr2
Yr3
Yr4
Yr5
Yr6
Yr7
Yr8
Yr9
The timeframes have been established assuming the implementation of concurrent infrastructure
and business processes. Events have been established in terms of priority on the understanding that
securing the first production cycle harvest is a key objective. Should any resource limitations impact
the business plan or timeframes, the key objective of the first production cycle harvest will be
prioritised above others. We are reasonably certain the plan is viable as stated but prefer to prepare
for possibilities.
2.3 The Company
Brightwater Trade & Invest 43 (Pty) Ltd – trading as “Brightwater Aquaculture”
The shareholders of Brightwater Aquaculture hold diverse business interests within the Eastern
Cape.
Between them they have an exceptional business development and management record.
The group is closely linked to the economic development within the Eastern Cape and works closely
with both local and provincial government through one of its companies, performanceUnlimited,
which is a successful management consultancy. Headed up by Mzwandile Poswa, partners within
the group boast over 30 years combined experience within business development and strategic
management of growing and expanding businesses throughout Africa.
2.4 Shareholding and Management Philosophy
The Company will embrace BBBEE standards and will follow a policy of offering all Senior
Management Share Options in the Company. The company will be compliant with BEE legislation in
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terms of shareholding. The company will ensure (as it has with other interests) that compliance is
achieved in terms of the seven pillars of BBBEE namely:
1. Ownership
a. BEE ownership is implicit in the shareholders identified above
2. Management Control
a. Mzwai Poswa will be Managing Director of the company
b. Management Levels will be occupied where possible with suitably qualified BEE
candidates
3. Employment Equity
a. Of the proposed 40 staff members, BEE staffing will occupy a minimum of 30 of
these posts
4. Skills Development
a. A large portion of operating capital will be made available for the development of
our staff members.
5. Preferential Procurement.
a. Where possible only BBBEE suppliers will be utilised
6. Enterprise Development
a. As with the ethos of the company, a strong focus will be on enterprise development
that will allow us to be a leading mariculture company not only operationally but in
the support of BEE start up ventures
7. Corporate Social Investment
a. The members of the organisation have traditionally been involved in both investing
time and money into their local community. This trend will continue over time.
2.5 Company Structures
2.5.1
Directors Roles and Responsibilities
Mzwai Poswa
BSocSci (Rhodes), Post Grad Certificate in Public Management and Development (FHIG), Masters of
Management in Local Government (Research Outstanding)
Mzwai has been active in Eastern Cape province all his life in both community and business
development. He has over 12 year’s Senior Management experience and is held in high regard by the
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business and political arena’s both locally and nationally. He is an outstanding manager of people
and processes and has been involved in many high impact projects within South Africa. His
professional experience ranges from consultancy to industry. He has been on the board of directors
of numerous businesses and organizations and will play an active role as the Managing Director of
the venture.
Lyall Welgemoed
Bcom (Economics, Management, Psychology), MBA Strategic Financial Management
Lyall has been involved in various industries throughout his career where he has managed various
Greenfield projects in the excess of USD500 million. He is currently a member and director of various
companies with interests in consulting, property management, property development and
renewable energy. His passion is the coastal environment and the sustainable management of the
marine eco-system. He has over 12 years Senior Management and Director Level experience.
Phillip White
CA(SA)
Phillip is a CA with over 10 years Senior Management and Director Level experience. He has and
abundance of experience in the management of large companies and Greenfield projects. He is
currently a director of various companies within the Eastern Cape.
Dr Niall Vine – Share Option*
M.Sc. (Ichthyology), Ph.D. (Fisheries Science)
Our operations director has vast experience in the management and development of fish farms and
is considered a leading expert in the kob farming internationally. He is well respected in both the
private sector and academic mariculture arenas.
*Dr Vine has a share option to take up shares in the company based on performance
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Brightwater Aquaculture
• Operational Management of
farm
• Management of all operational
staff and performance
• Responsible for meeting
budgetary and production
targets
• Biosecurity
• Bio Hazard Management
• R&D management
• Performance of venture to plan
• Chair of Committees
• Strategic Management of
External Stakeholders
Director
Operations
Managing
Director
Strategic
Director
Financial
Director
• Sales and Marketing
• Feed and processing
development
• New Product Development
• Internal and External Stakeholder
Management
• Governance
• Performance to targets
• Oversight – financial and
managerial
• Financial Reporting to Board
2.6 The Overall High level organogram for the venture
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Brightwater Aquaculture
Board of Directors
Managing
Director
Operational Director
Strategic Director
Financial Director
General Manager
Sales and
Marketing
Financial
Manager
Hatchery
Manager
Business
Development
Human Resource
Management
R&D Manager
Juvenile Manager
Grow Out
Manager
The organogram depicted above is the ideal organogram that will be obtained in year three.
2.6.1
Staffing Requirements
The following staffing requirements have been identified
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Staff
Managing Director
Financial Director
Strategic Director
Director of Operations
Salaries and Wages
General Manager
Financial Manager
Marketing Manager
Marketing Support
Operations Manager
Financial Support
Secreterial
Cleaning
Hatchery Manager
Assistant Managers
Support Staff
Research and Development Manager
Support Staff
Juvenile Manager
Assistant Managers
Support Staff
Grow Out Manager
Assistant Managers
Support Staff
Total Staff
Yr 2
1
1
1
1
1
2
1
1
4
3
8
1
2
19
1
6
1
2
9
2
4
18
89
Yr3
Yr4
1
1
1
1
1
2
1
4
2
4
4
15
2
4
24
1
6
1
2
12
2
4
18
113
Number of Staff
Yr5
Yr6
1
1
1
1
1
1
1
1
2
3
2
4
2
5
4
15
2
4
24
2
8
2
4
16
4
6
45
158
2
3
2
5
3
5
5
15
2
4
32
2
8
2
4
16
4
6
45
169
Yr7
Yr8
1
1
1
1
1
1
1
1
1
1
1
1
2
3
2
12
3
5
5
15
3
5
38
2
8
2
4
16
4
6
65
204
2
3
3
12
4
5
5
15
3
5
40
2
8
4
4
16
4
8
75
222
2
3
3
12
4
6
5
15
3
5
40
2
8
4
4
16
4
8
75
223
2.7 Constitution of the Board
To satisfy corporate governance best practice, the board will be constituted by members of the
company and funder. The chairmanship will be on a rotational basis, with the funder being offered
the chairmanship in the first year.
2.7.1
Corporate Governance
Corporate Governance embodies the way an organization conducts itself. It is a holistic look at the
manner in which leadership strives to incorporate ethics and risk managing controls within an
organization whilst keeping all stakeholders adequately informed.
The single most significant
guiding reference in this regard is the recently finalised King III report. This report provides
structured information aimed at enabling any organization to achieve sound governance.
The business will strive to incorporate sound corporate governance principles as outlined in the King
III report. The degree to which principles are implemented will be based on cost versus benefit
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assessments and appropriateness. Many of the provisions of the report are intended for large listed
entities and would not be viable for private companies or close corporations. The aim of our
company will be to embrace the spirit of the code in an effort to maintain an ethical and open
management approach.
The King report provided clear guidance on:

Ethical Leadership

Boards and Directors

Audit Committee

Governance of Risk

Governance of IT

Legislative Compliance

Internal Audit

Governing Stakeholder Relationships

Integrated Reporting & Disclosure
We will prioritise implementation areas based on the immediate needs of the company and benefits
which will be derived from implementation of the guidance. The immediate areas which will receive
attention will include:

Ethical Leadership

Boards and Directors

Governance of Risk

Governance of IT

Governing Stakeholder Relationships

Integrated Reporting & Disclosure
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Board members will be governed by the King Report (as amended) on Governance and reporting
structures will be agreed upon and implemented.
The following committees will be formed:
1. Development and Strategic Committee
2. Audit Committee
3. Performance Committee
4. Risk Committee
The role of the board will be to chair each of these committees and have direct input on the
strategic and operational management of the company.
2.8 Operational Management
Operational Management will be the mandate of the company, with specific operational skills being
supplied by the various partners within their areas of expertise on a full time basis.
Regular Management meetings will be held with a Board Member in attendance. The initial
structure of the company (although illustrated below in a traditional organogram) will be a matrix
structure where the involvement of Senior and Middle Management will be encouraged. The
following committees will be established at an Operational Management Level:

Weekly operations meeting

Bi Monthly Finance Committee

Bi Monthly Senior Management Meeting

Monthly Budget Expenditure Committee
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2.8.1
Management Planning
Management Planning will be based on project plans stemming from the approved business plan.
These project plans will be based on the responsible manager taking control of meeting deliverables.
An example of the project plans will be:
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Brightwater Aquaculture
The Implementation Timetable
Year 1
Month 12
Year 2
Month 24
Year 3
Month 36
Year 4
Month 48
Year 5
Month 60
Year 6
Month 72
Funding
approval
Hire Staff
Finalise designs
PHASE 2
Construction
PHASE 1
Planning
& Design
Start – Year 0
Month 0
Earthworks
Construction
Build hatchery
PHASE 3
Production
Test systems
Production (500 ton facility)
Collect broodstock
Spawn own broodstock
Identify alternative markets
PHASE 4
Expansion
Earthworks
Construction
Test systems
SEPARATE
FUNDING
REQUIRED
PHASE 5
New ventures
Production (+1 000 ton facility)
Investigate new potential species
Investigate viability of processing facility
Investigate viability of feed plant
The Business Plan is built on securing multiyear funding for the activities highlighted in blue. The
accessing of multiyear funding will be based on the farm meeting its financial and production targets
as laid out in the financial plan. The proposed funding structure will also serve to hedge against
unforeseen critical failure factors by exposing only portion of the capitalisation funding at any given
time. We do however believe that industry, business and operational risks are all identified,
understood and manageable and that the business has a high success probability. Where pertinent,
conservative figures and forecasts have been used in the financial modelling to best manage failure
risk.
The timeframes have been established assuming the implementation of concurrent infrastructure
and business processes. Events have been established in terms of priority on the understanding that
securing the first production cycle harvest is a key objective. Should any resource limitations impact
the business plan or timeframes, the key objective of the first production cycle harvest will be
prioritised above others. We are reasonably certain the plan is viable as stated but prefer to prepare
for possibilities.
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Brightwater Aquaculture
In terms of the management of deliverables activity based costing methods will be employed and
responsibility budgeting for all Senior Management will be enforced. Reporting from the Senior
Management will be detailed on budget vs actual spend vs deliverable.
2.8.2
Human Resource Management
Until the organisation is fully productive (greater than a 1000 tonnes), Human Resource
Management will be outsourced via an agreement with a Human Resource Management Partner
situated in East London.
All members of the Operational Team will have job descriptions and performance targets specific to
their area of responsibility. Performance Management will be informed via the project plan’s
developed for operational implementation and peer review will be undertaken via the following
mechanisms:
a. Operational Assessment of deliverables per activity at the weekly operations meeting and bi
monthly senior management meeting
b. A performance review with supervisor of individual employee on a quarterly basis
As Human Resource Management is of a critical nature to the success of this industry in terms of
retaining, training and skilling all the employees to meet the evolving nature of the industry, a
people focused culture will be entrenched in the organisation (as has been implemented within the
other commercial interests of the shareholders). The management of people will be defined by
policy implementation and personal development. The following policies will be included in the
management of Human Resources within the organisation:
a. Policy on Drug and Alcohol use
b. Policy on Sexual Harassment
c. Policy on E-mail and Internet Usage
d. Policy on Dress Code
e. Attraction and Retention Policy
f.
Remuneration Policy
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g. Policy on Work Hours
h. Policy on Security
i.
Policy on Telephone Usage
j.
Annual Performance Bonus Policy
k. Anti-corruption and Fraud (Theft) policy
l.
Code of Ethics and Business Conduct
m. Policy on HIV/AIDS in the workplace
2.9 Strategic Alliances
The company wishes to become known as an organisation positioned at the cutting edge of research
within the mariculture industry. To achieve this and to ensure that growth into the future is
sustainable, a large focus of the organisation will be on research and development that will include
transfer of knowledge both from the venture to Rhodes University and vice versa. This research will
be carried out jointly by our own staff and researchers and students predominantly from the
Department of Ichthyology & Fisheries Science, Rhodes University. This will not only ensure that
technology transfer takes place between our businesses and the researchers, but is will ensure that
the research outcomes are successfully incorporated into the operational procedures of the farm. In
addition to technology transfer between industry and researchers, this approach will also ensure
that our staff to stay abreast of the latest industry developments while in turn providing university
students with valuable exposure to the workings of a commercial operation.
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2.10 Project implementation
The approach to the implementation of the project will be based on a phased approach which will be
borne out in the costings. The different phases will identify both growth potential and supply chain
integration opportunities.
Phase
Capital Construction
1. Construction of
platforms for 500
tonnes of crop
2. Construction of
engineering
infrastructure to 1000
tonnes
Phase 1
3. Full construction
implementation for
500 tonnes of crop
Inputs
1. Fingerlings
Working Capital
1. Salaries and
Wages
2. Broodstock
2. Operating
3. Feed
4. Electrical Supply
5. Oxygen
Costs
3. Rental of site
4. Repayment of
Interest
4. Construction of
475sqm of office
accommodation, lab,
receiving and dispatch
area
5. Full hatchery function
of 1000sqm
6. Research and
Development facility
1. Construction of
platforms for 800
tonnes of crop
Phase 2
2. Full construction
implementation for
1000 tonnes of crop
1. Fingerlings
1. Salaries and
Wages
2. Broodstock
2. Operating
3. Feed
4. Electrical Supply
5. Oxygen
Costs
3. Rental of site
4. Repayment of
Interest
Executive Summary –
Page 48 of 90
Brightwater Aquaculture
1. Construction of
platforms for 1200
tonnes of crop
Phase 3
2. Erection of Tunnelling
and infrastructure for
1200 tonnes
1. Feed
2. Electrical Supply
3. Oxygen
3. Full construction
implementation for
1200 tonnes of crop
1. Construction of
platforms for 1500
tonnes of crop
Phase 4
2. Erection of Tunnelling
and infrastructure for
1500 tonnes
1. Feed
2. Electrical Supply
3. Oxygen
3. Full construction
implementation for
1500 tonnes of crop
1. Full equipment and
1. Feed
1. Repayment of
construction
Phase 5
implementation for
1500 tonnes of crop
full loan value
2. Electrical Supply
3. Oxygen
within Cash
Flow Year 5
and 6
2.11 Identification of High Risk Areas and Mitigation Plans
2.11.1 Feedstocks
As highlighted in the 2009 Aquaculture Benchmarking Survey Feed is cited as a major cost factor.
Imported feed was subject to duties but local feeds were not of a good quality. Also feed is
dependent on commodity prices internationally and to currency fluctuations. This risk has been
Executive Summary –
Page 49 of 90
Brightwater Aquaculture
highlighted as a strategic threat to the company and will need to mitigated via the vertical
integration strategy that the company has identified.
2.11.1.1 Risk Mitigation
The company will in its phase 2 (from month 15 in the cash) develop a business case for a feed
production facility based on the R&D undertaken on this specific threat. This risk should be mitigated
by phase 3 with the establishment of an owned vertically integrated feed production facility.
2.11.2 Human Resources
A high risk identified has been the attraction and retention of suitably skilled resources to the
organisation. High skill levels and experience are required to implement this venture successfully
from reasonably small pool of available resources.
2.11.2.1 Risk Mitigation
Risk
Shortage
Short Term Solution
of
Long Term Solution
suitably a. We have been able to attract the
services of PHD Mariculture candidate
qualified and experienced
to the General Management Role of the
human resources to ensure
organisation
successful start up
b. We have been able to attract a senior
manager, grow out with over six years
experience to the organisation
We have offered shareholding and
Shortage
a. An attraction and retention
policy will be part of the
policies implemented within
the organisation
of
suitably a. The incorporation of Rhodes University
as a Research and Development partner
qualified and experienced
in this venture is designed to mitigate
human resources to ensure
short comings in technical expertise if
sustainable growth and
encountered
development
industry
within
the
b. As part of the R&D budget, all staff will
be expected to undergo intensive
training and continous development
within the organisation. As highlighted
in the R&D budget, a large emphasis
has been placed on development by the
Executive Summary –
share options to both of these
candidates thus ensuring long term
stability in our management team
from the initial start up phase
b. Candidates from Rhodes
University will be identified and
offered employment through
the R&D partnership
c. Strong resources will be
identified within the industry
and share options will be
Page 50 of 90
Brightwater Aquaculture
organisation
Executive Summary –
included in negotiations to
ensure that we attract and
retain the right calibre of
expertise
Page 51 of 90
RISK IDENTIFICATION MATRIX
RISK AREAS IDENTIFIED
SPATIAL SCALE
TEMPORAL
CERTAINTY
SEVERITY
SCALE
SCALE
(DURATION)
(LIKELIHOOD)
/
SIGNIFICA
MITIGATION
POST-MITIGATION
BENEFICIAL
NCE PRE-
MEASURES
Brightwater
Aquaculture
SCALE
MITIGATI
ON
PLANNING AND DESIGN PHASE
GENERAL IMPACTS
Inadequate planning to accommodate
Localised
Long-term
Definite
Very Severe
VERY HIGH
localised
Long-term
Possible
Severe
HIGH
Localised
Permanent
Definite
Severe
HIGH
the high energy demand of the facility
for cooling and heating purposes may
severely
pressurize
the
electricity
supply available for the ELIDZ
Inadequate design and provisions of
storm water management will lead to
damage,
pollution
and
potential
flooding of the site
The establishment of
the facility
contributes to development pressure
along the coast
 ELIDZ has
undertaken that the
electrical
requirements are
available for the
site.
 To mitigate the high
risk possibility of
ESKOM power
outages the venture
will purchase
generators with the
capacity to manage
its electrical
requirements
should power
outages occur. This
has been costed
into the design of
the farm
 Renewable sources
of energy such as
wind and solar
power must be
encouraged for use
at the facility
 A Storm Water
Management Plan
will be designed for
the site and
implemented in
accordance with the
Engineering
specifications
 Materials used for
storm water
infrastructure must
meet the ELIDZ and
SABS quality
standards
 The proposed
facility will be
located in an
existing Industrial
Development Zone
with the
appropriate Zoning
for the activity
HIGH
 A dedicated
abstraction pipeline
and storage
reservoir will be
built for the entire
ELIDZ Mariculture
Zone that will
accommodate for
200 litres/second.
 The construction of
the pipe as per
ELIDZ will
commence in
February 2010 and
be completed
within 6 months
LOW
MODERATE
MODERATE
SEA WATER SUPPLY
Inadequate planning and design of the
Localised
sea water supply infrastructure to cater
for the aquaculture facility
Executive Summary –
Long-Term
Possible
Severe
HIGH
Page 52 of 90
Brightwater Aquaculture
Inappropriate planning and design of
Localised
Long-Term
Probable
Severe
HIGH
sea water abstraction infrastructure to
filter
water
could
lead
to
the
abstraction of sea water polluted from
the Hood Point Marine Outfall
 Temporary seawater supply
options are in place
 The ELIDZ
abstraction
infrastructure will
accommodate for
treatment of all sea
water to standards
acceptable for
mariculture before
it is supplied to any
facility
 A monitoring
Programme that
frequently monitors
the quality of the
abstraction water
has been developed
and costed into the
financial model. The
analysis of the
water will be
conducted by an
accredited
laboratory
MODERATE
WASTEWATER/EFFLUENT DISPOSAL
Inadequate planning and infrastructure
Localised
Long-Term
Possible
Severe
HIGH
Localised
Long-Term
Possible
Very Severe
VERY HIGH
design for effluent (including blood
water from slaughtering) treatment
may result in pollution of the coastline
Inadequate planning and infrastructure
design may result in effluent (including
blood from slaughtering) disposed of
being abstracted at the main ELIDZ
abstraction point
 A Monitoring
Programme that
frequently monitors
the quality of
released effluent to
BCM and MCM
standards is costed
into the business
plan. The analysis of
the water quality
will be conducted
by an accredited
laboratory
 The effluent will be
disposed of via the
Hood Point Pipeline
which is located
approximately 8km
away from the
proposed
abstraction point,
which is far enough
not to contaminate
the water supply
 High energy seas
will result in rapid
dispersal if effluent
thus reducing the
risk of effluent
being abstracted
MODERATE
 Prevent the escape
of cultured
specimens through
the use of physical
barriers such as
filters and
appropriately sized
mesh screens
placed throughout
the facility have
been costed into
LOW
MODERATE
BIODIVERSITY
Inadequate provision for the control of
Regional
escape of cultured fish into the natural
Coastline
environment could cause changes in
the natural genetic diversity and
genetic structure of wild populations
Executive Summary –
Permanent
Possible
Very Severe
HIGH
Page 53 of 90
Brightwater Aquaculture
the design
 There will be
genetic
compatibility
between the wild
and culture stocks
by as the brook
stock are indigenous
 The Venture facility
intends to culture
indigenous fish
species, and thus
there are no
potential impacts
relating to issues of
alien species
negatively affecting
biodiversity
BIO-SECURITY
Inadequate planning and design of the
Localised
Long-Term
Probable
Very Severe
VERY HIGH
Localised
Long-Term
Possible
Very Severe
VERY HIGH
Localised
Long-Term
Possible
Very Severe
HIGH
Localised
Long-Term
Definite
Very Severe
VERY HIGH
facility to address disease risks from;
Large
Ectoparasites
(trematodes,
nematodes) and Small Ectoparasites
(protozoans and dinoflagellates)
The inadequate treatment of water
abstracted poses risk to animal and
public health
The inadequate treatment of effluent
may result in pollution of the coastline
and proliferation of diseases and
parasites into wild fish populations
Inadequate
planning
for
the
translocation of stock poses a great risk
to the introduction of new diseases
from outside the proposed facility
boundaries
Executive Summary –
 A rigorous Health
management plan
for the facility has
been developed and
implemented to
address the
aggressive screening
and quarantine of
animals identifies to
be infected by
Ectoparasites
 A Health
Management Plan
for the facility has
been developed and
implemented to
address the
continuous testing
of the water quality
 All water entering
the facility will be
filtered and the
filtering system e.g.
sand must be
aerobic
 A Monitoring
Programme that
frequently monitors
the quality of
released effluent to
BCM and MCM
standards has been
included and
costed. The analysis
of the water quality
will be conducted
by an accredited
laboratory
 A rigorous Health
Management Plan
for the facility has
been developed and
implemented to
address the
aggressive screening
and quarantine of
translocated brood
stock before they
are incorporated
into the functioning
MODERATE
LOW
MODERATE
MODERATE
Page 54 of 90
Brightwater Aquaculture
of the facility
 The facility will after
the first two crops
produce all seed
stock from their
own hatchery as
opposed to
acquiring stock from
external sources
CONSTRUCTION PHASE
GENERAL IMPACTS
Inappropriate construction and waste
management methods
surface
and
Localised
will result in
ground
Medium-
Possible
Severe
HIGH
 All machinery using
oils and fuels will be
stored on hardened
surfaces.
LOW
Probable
Moderately
HIGH
 The tender will
ensure that
appropriate toilet
facilities are
provided for
construction
workers. The toilets
(temporary) may
not be located near
the drainage lines
and sewage must be
disposed of
appropriately
 Building waste must
be removed to an
appropriate,
approved offsite
disposal location i.e.
Roundhill in terms
of the tender that
will be developed
for the construction
of the farm
LOW
 A detailed Waste
Management Plan
has been developed
and implemented
that required that
dead fish are
removed from the
site before the end
of the working day
and are disposed of
as the BCM by-laws
require.
 A standby generator
must be installed in
the event of power
failures to ensure
continuous
electricity supply to
the facility during
power cuts
 Notice of planned
power cuts must be
given to The
Venture
MODERATE
Term
water
contamination
Lack of appropriate toilet facilities for
construction
workers
Community
Short-Term
and
Severe
inappropriate placement of latrines
(i.e. near a stream or water body) can
result in human waste contamination
of streams and site
General construction waste, litter and
Localised
rubble are unsightly and can damage
Medium-
Possible
Term
Moderately
MODERAT
Severe
E
the soil and surrounding environment
LOW
OPERATION PHASE
GENERAL IMPACTS
During the operation of the facility,
Localised
electricity disruptions could cause high
rates of animal mortality leading to
waste management issues
Executive Summary –
MediumTerm
Possible
Severe
High
Page 55 of 90
Brightwater Aquaculture
During the operation of the facility the
Localised
Long-Term
Possible
Severe
HIGH
BCM
Long-term
Definite
Very
HIGH
Beneficial
POSITIVE
Very
HIGH
Beneficial
POSITIVE
Very Severe
production of inorganic and organic
(flesh and non-flesh) waste can cause
odour,
disease
and
insect
(flies)
nuisances for surrounding industries
The project will result in substantial
increase in permanent job creation
Opportunity
for
training
and
BCM
Permanent
Definite
qualification of staff operation the
Localised
Permanent
Definite
MODERATE
HIGH POSITIVE
 As per High Risk
Area: Human
Resource Section of
the document
HIGH POSITIVE
VERY HIGH
 Appropriate and
safe storage
facilities will be
provided for onsite
for the oxygen
cylinders as per
design
 A Fire Management
Plan will be
developed in line
with the BCM
Disaster
management
Protocol
 Onsite fires will not
be permitted
MODERATE
 A rigorous health
management Plan
for the facility has
been developed and
implemented to
address the
aggressive screening
and quarantine of
animals identified to
be infected by
Ectoparasites
 A Health
Management Plan
for the facility has
been developed and
implemented to
address the quality
of animal feed
MODERATE
facility
Risk of fires during operation of the
Management so
contingency plans
can be drawn up
 Negotiations
between Eskom and
the ELIDZ should be
held to negotiate
only cutting off
electricity supply in
extreme cases due
to the sensitivity of
the animals being
farmed
 A detailed Waste
Management Plan
has been developed
and implemented
that requires that
dead fish are
removed from the
site before the end
of the working day
and are disposed of
as the BCM by-laws
require
 N/A
facility as a result of inappropriate
storage of flammable oxygen cylinders
kept onsite
BIODIVERSITY
During the operation of the facility,
inappropriate
monitoring
Localised
Long-Term
Probable
Very Severe
VERY HIGH
Localised
Long-Term
Possible
Very Severe
HIGH
and
maintenance of the facility could lead
to disease risks from:
Large
Ectoparasites
(trematodes,
nematodes) and Small Ectoparasites
(protozoans and dinoflagellates)
During the operation of the facility ,
inappropriate monitoring of feed could
cause contaminated food to be fed to
animals which could potentially affect
their health and fecundity
Executive Summary –
MODERATE
Page 56 of 90
Brightwater Aquaculture
The use of live fish and other living
Localised
Long-Term
Possible
Very Severe
HIGH
marine animals for feed during the
operation of the facility will cause a
high risk of parasite transfer
 A rigorous Health
Management Plan
for the facility has
been developed and
implemented to
manage the use of
live fish and
organisms as feed
MODERATE
 Fresh dead or
Poor sea water quality supplied to
Localised
Long-Term
Definite
Very
VERY HIGH

facility during its operation, will affect
the
gonad
development,
gamete
quality and larvae survival of the brood
stock which will negatively affect the
efficient production of finfish

Inappropriate methods of monitoring
Localised
Long-Term
Definite
Very Severe
VERY HIGH

the translocation of stock poses a great
risk to the introduction f new diseases

from outside the proposed facility
boundaries
The introduction of fish and fish
Localised
Long-Term
Definite
Very Severe
VERY HIGH

products into the facility for research,
development, feed or pets may cause
the
proliferation
of
diseases
throughout the facility


Executive Summary –
frozen fish obtained
from a reputable
source should be
used where
formulated feeds
are not utilized.
A Health
Management Plan
for the facility has
been developed and
implemented to
address the
continuous testing
of the water quality
All water entering
the facility will be
filtered and the
filtering system e.g.
sand will be aerobic
A rigorous Health
management Plan
for the facility
addresses this issue
The facility will
endeavour to
produce all seed
stock from their
own hatchery as
opposed to
acquiring stock from
external sources
Research animals
will be subjected to
stringent biosecurity protocols
outlined and
addressed in a
Health
Management Plan
A designated
research area will
the relevant BioSecurity measures
has been adopted
win conjunction
with Rhodes
University
The housing of
marine organisms as
pets or for
ornamental
purposes within the
facility will be
prohibited
HIGH
HIGH
MODERATE
Page 57 of 90
Brightwater Aquaculture
3
The production process
3.1 Hatchery Design
The hatchery will be approximately 1500m2 and will be housed inside the tunnel structure. Water
will be pumped from the IDZ through a drum filter, where it will be filtered to 80 microns before
being disinfected using ozone and fed into a reservoir tank. The reservoir tank will act as a
sedimentation tank, and will supply both the broodstock systems and the larval rearing systems.
From the reservoir the water is pumped separately into the larval rearing and broodstock systems.
The hatchery and broodstock systems are all capable of being temperature controlled using heat
pumps. Aeration will be by means of a blower, and airlines throughout the building (with oxygen
available as backup), feeding both broodstock and larval system tanks and biological filters. A backup
generator will supply electricity in the event of a power failure. The building is designed in such a
way as to minimise disturbances to both the broodstock and larval systems.
Executive Summary –
Page 58 of 90
Brightwater Aquaculture
Figure 5.2 – A 1.5 million fingerling per year kob hatchery and office block (56m x 34m)
3.1.1
Broodstock & quarantine area
The broodstock area (shaded blue in above drawing) will be divided into four rooms of identical size.
Each room will contain two systems with each system comprising two 20 m 3 (5 m diameter by 1.0 m
deep) porta-pools, each of which holds five adult males and five adult female kob of approximately
12 kg each. One of the rooms will be used as a quarantine area where all recently acquired wildExecutive Summary –
Page 59 of 90
Brightwater Aquaculture
caught broodstock will be held and propholactically treated until they are deemed safe to introduce
to the broodstock system.
Water is pumped into the sump of each system from the reservoir. The sump (10 m 3) will act as a
sedimentation tank, after which water will flow through a sand filter, protein skimmer and then into
a biological filter containing biological media. A pump will return the water via a heat pump to the
system tanks. The systems are recirculating and water will be replaced at ten percent of system
volume per day with the sand filters being back-flushed twice daily.
3.1.2
Larval Rearing Systems
There are four identical larval rearing tanks (shaded orange in above drawing) in a temperature
controlled room in the hatchery. All of the tanks are connected to a sump and biological filter as
described for the broodstock systems. However to reduce the waste load and thereby maximise
larval survival, outflowing water from the tanks is further filtered by means of a UV filter. This is
placed after the protein skimmer and sand filter, immediately before returning to the tanks.
3.1.3
Juvenile weaning system
This system (shown in green in figure 5.2 above) consists of twelve 12m 3 tanks connected to their
own filtration system. To ensure as constant an environment as possible during this sensitive phase,
heaters and air-conditioners will be used to ensure the temperature remains constant. Regular
siphoning and cleaning of the tanks will help ensure that waste products and uneaten food is
removed regularly. The filtration system will consist of drum filters, protein skimmers and a moving
bed biological filter.
3.2 Grow-out systems
3.2.1
20 gram post-hatchery production
The juvenile grow-out system (shaded green in figure 5.3 below) will be used to grow kob from
approximately 20 g to 100g, i.e. during first 8 weeks in grow-out, post-hatchery production. To
reduce the stress of moving the small fish from the hatchery to the weaning system, the fish will be
moved through an underground pipe between the two buildings. Once the fish are around 100g in
size they will be moved using fish pumps into the grow-out system (shaded blue).
Executive Summary –
Page 60 of 90
Brightwater Aquaculture
Figure 5.3 – Growout section of the farm. Shaded areas represent particular sections – Greenjuvenile grow-out; Red- offices; blue- final grow-out; Orange- harvesting & work area.
Executive Summary –
Page 61 of 90
Brightwater Aquaculture
3.2.2
Final grow-on unit (100g to harvest)
The final grow-out production units (shaded blue in above drawing), will be used to grow kob from
approximately 100g to harvest size (1000 to 2500g). Two independent systems will be used. Two
systems consisting of 24 tanks holding 50m3 connected to a drum filter, protein skimmer and
biological filter will form the core of the facility. Oxygen will be provided to all of the tanks through
the on-site oxygen generator however back-up oxygen cylinders will also be stored on-site in case of
emergencies. The water volume in each tank will be replaced by clean filtered water at a minimum
rate of once per hour. A daily exchange of 10% clean, new seawater will replace the entire farms
water volume.
The capex requirements for grow-out are highlighted in the Financial Business Case section of this
document. .
The following section illustrates the grow-out requirements of the farm, at a 500 ton scale. This scale
will then be replicated as per the modular design of the farm to ramp up to the +1 000 ton final
target. The production of kob required to meet annual harvest targets in this business plan will be
staggered over a 12 month period. Harvesting will occur every two to four weeks (depending on
market requirements) while juveniles will be added to the production system from the hatchery
approximately every 3 months. The reason why juveniles would need to only be added quarterly and
not monthly is due to the variation in growth that occurs within an age group. The fast growers will
reach market size approximately three months before the slow growers and as more and more age
groups are added to the production system, older, slow growing fish will be caught up by younger,
fast growing fish and therefore production will even out. This will result in the most efficient use of
space on the farm once full production has been reached, and it will allow for a year round
availability of sale-size stock, which the market demands.
Executive Summary –
Page 62 of 90
Brightwater Aquaculture
Broodstock section
8x 20m3 circular tanks
Ave standing biomass per tank: 120 kg
Filtration system shared by 2 tanks
Filtration volume: 10m3
Grow-out section (there are 2 of these and
one smaller system - 25% volume)
24 x 50m3 circular tanks (1200 m3)
Ave standing biomass per tank: +1500 kg
Filtration volume: 570m3
Larval rearing & Livefood section
4x 7m3 circular tanks (shaded orange)
Ave standing biomass per tank: 10 kg
Filtration volume: 10m3
Algae & rotifer culture volume: 30m3
Artemia culture volume: 2m3
Juvenile section
12x 12m3 circular tanks
Standing biomass per tank: 240 kg
Filtration volume: 110m3
SCALE: 1mm = 1m
Figure 5.4 – Schematic representation of the dusky kob production process from broodstock to
grow-out.
3.2.3
Spawning
The photoperiod and temperature in each broodstock room will be controlled individually to enable
manipulation of the spawning cycle throughout the year. The different systems will be maintained at
different photoperiods and temperatures to allow for year round spawning. The fish in each system
will be spawned over a period of three months, after which temperatures will be decreased and
autumn through spring will be simulated until the system “summer” the following year. Therefore
throughout the year there will always be a system in summer, autumn, winter and spring, where the
system in summer will be spawning, and the system in spring will be getting ready to spawn. The
adults will be hormonally induced to spawn in the tanks and release the eggs into the water column.
As with most marine pelagic spawners, the eggs of dusky kob float, and will be removed from the
broodstock tanks by means of an egg catcher, washed and distributed evenly into hatching tanks
Executive Summary –
Page 63 of 90
Brightwater Aquaculture
3.2.4
Larval Rearing
Eggs will be stocked into the larval tanks at an initial water volume of 5 m3. After feeding begins the
water volume in each tank will be increased, as the biomass increases in order to maintain a
constant stocking density. This is done to prevent excessively large quantities of food that would be
necessary if the tanks were at full volume. Algae and rotifers are fed per litre of tank volume and
therefore a reduction in tank volume would minimise unnecessary food loss for a given biomass at
any time. The water will be kept at optimal temperature by means of in-tank heaters and airconditioning, and at optimal dissolved oxygen concentration by means of oxygen addition.
3.2.5
Larval Feeding
Eggs hatch 48 hours after spawning, and feeding commences on day three. At hatch larvae are 2.3
mm total length, metamorphosis starts at 12 mm after 23 days and is completed at 26 mm after 34
days. Cannibalism has been identified from day 18 onwards and therefore regular size grading is
required during the early stages. Growth during the first months is in the range of 0.5 to 1.7 mm per
day. A concentration of around five thousand rotifers per litre will be fed until day twelve. From day
eight to 28, Artemia will be fed at a concentration of five thousand per litre. The overlap of foods is
known as weaning and is essential to allow the transition from one food source to another, by
allowing the juveniles to select the preferred size of food. A dry food (50% protein) will be
introduced from day 20 to day 42 after which time the juveniles will be moved to the juvenile
weaning system adjacent to the hatchery.
3.2.6
Broodstock Feeding
The broodstock will be feed a high lipid combination diet of marine fish such as pilchard and squid at
around 2% body mass per day. To ensure the fish are maintained in optimal spawning condition
their diets will be supplemented regularly with multivitamin tablets and omega-3 oil capsules.
3.2.7
Algal Production
The algae, Nannochloropsis and Chlorella spp. will be batch cultured in glass flasks in the algal room
under 150W metal halide lamps. These cultures are used to seed a porta pool outside the hatchery
where it will be mass-produced to feed the rotifers and Artemia.
3.2.8
Live food production
Initially a batch sample of high quality rotifers will be purchased. From this, a continuous culture will
be maintained. The rotifers will be fed chlorella, yeast and cod-liver oil, and enriched with highly
unsaturated fatty acids. High quality Artemia cysts will be bought, de-capsulated using household
bleach and fed to juveniles as described above.
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3.2.9
Grow-out production
Until the Brightwater Aquaculture hatchery is fully functional, fingerlings (approximately 20g/fish)
will be purchased from Pure Ocean Aquaculture’s kob hatchery. The grow-on of dusky kob from
approximately 20g to 1.0 kg will take an average of 12 months (and approximately 20 months to
2.5kg) under the environmental conditions in the East London area. The temperate climate of East
London provides an ideal year-round temperature for the culture of dusky kob (and other potential
aquaculture species) and once full production has been reached, optimisation of the culture
requirements through research and development and maximisation of growth rates is likely to
occur, thereby further improving production efficiency and subsequent time to harvest.
This bioplan provides information regarding number of fish and tank volume requirements based on
modelled growth rates, survival and food conversion ratios (FCR). The plan is conservative and
therefore as efficiencies improve, the plan will be tweaked to best suit the business model. An
example of the bio-plan is shown in figure 5.5 below.
Figure 5.5 – Screen shot of the proposed bio-plan for the production of 500 tons/year of dusky kob.
The yearly tonnage is expressed as the weight of a whole fish. Similarly, the farm gate market price
has also been based upon whole fish weight. We do however intend utilising the proposed ELIDZ
SABS/HACCP approved processing facility where we will gut and gill the fish which realises a dress
out weight of approximately 85% of the original weight. The value added by this intermediate
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processing reduces the risk of spoilage which then allows the fish to be easily transported for
additional processing (i.e. filleting, smoking etc), or be exported on ice or supplied directly into the
local and national hospitality industry as fresh product.
3.3 Operational Attributes
3.3.1
Biosecurity
The prevention and containment of any disease in a commercial farming operation is extremely
important if the operation is to exist long-term. As with other types of intensive farming, fishfarming
relies on keeping large numbers of animals in a relatively small space which allows the easier spread
of disease between individuals.
To mitigate this, fish are often treated propholactically and
quarantined thereby minimising the incidence of the disease causing agent.
Brightwater
Aquaculture will subject all new fish (broodstock) to a disease treatment regime in a dedicated
section of the broodstock area which is situated away from all other fish systems. Once the fish
have settled in to the captive environment and the evidence of any disease is negative, the fish will
be moved into the broodstock system. It must be noted that although every attempt will be made
to eliminate all possible disease agents from the broodstock this is not always completely possible
and there is therefore always the chance of disease occurring at a later stage.
Disease management on the farm will be managed depending on the situation as some disease
causing agents require chemical treatment while others may simply require a manipulation of their
environmental conditions (i.e. changing the water temperature or salinity for a few days). The farm
has been carefully designed to reduce the possible effect of disease outbreak on the fish. To
minimise the transfer of disease from outside or other facilities, disinfection foot baths and handcleansing areas will be strategically placed at all entrances where all staff and visitors will be
required to disinfect their hands and shoes.
The hatchery and grow-out farm will follow procedures which have been developed to be consistent
with SABS (South African Bureau of Standards) and HACCP (Hazard Analysis Critical Control Points)
principles. HACCP is a preventative system or strategy used by the food manufacturing industry to
prevent the adulteration of food products. This system is designed to protect consumers from
hazards such as glass, metal, chemicals, and disease causing microorganisms. In the USA, seafood
processing is among the industries required by law to practice HACCP along with the juice,
meat/poultry, and dairy industries.
Aquaculture facilities face many of the same challenges,
particularly those associated with disease prevention, and HACCP is a flexible system that could
easily be applied to aquaculture. In recent years, both the World Aquaculture Society and the Food
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and Agriculture Organization of the United Nations have recommended the use of HACCP principles
in aquaculture facilities. The benefits of using HACCP in aquaculture are two-fold. First, this system
will help prevent fish disease and significantly decrease the risk of disease outbreaks and secondly,
the practice of HACCP in aquaculture can be used as a marketing tool as farms implementing the
principles can demonstrate production of a safe, healthy seafood product.
HACCP strategies identify the areas where pathogens may enter the system, ways to eliminate them
and the methods to show that the chain of production is being continuously audited to ensure that
every procedure within that chain is effective. The principles followed are:1: Hazard Analysis
To identify hazards, both microbiological and physical, at each step in the process through to
delivery.
2: Critical Control Points (CCP’s)
At CCP’s action can be taken to reduce or eliminate the hazard. For example, within the fish
farm there are control points at which pathogen reduction can take place as part of a
biosecurity programme.
Site security
Work boat disinfection, vehicle disinfection and footdips at farm
entrances/exits
Personnel hygiene
Waders, gumboots and equipment, hand hygiene
Equipment disinfection
Hand
nets,
harvesting
equipment,
vaccination
and
weighing
equipment
Surface disinfection
Tables, floors, walls
Aerial disinfection
Misting within buildings to control airborne pathogens
Rodent control
Integrated Pest Management Programme – bait stations
Production facilities
Broodstock, hatchery, fresh & sea water production & processing
3: Critical limits
Acceptable limits will be established for each hazard identified. Cleaning and disinfection
will be carried out in accordance with biosecurity procedures like those recommended by
DuPont
Animal
Health
Solutions
(http://www.dupont.com)
which
ensures
that
microbiological hazards meet those limits.
4: Monitoring
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Observation and measurement of cleaning and disinfecting will be conducted to ensure the
critical limits are met at each step.
5: Correction
Action will be taken if the critical limits are not met at each step. A review of the application
procedure will be made to ensure that it is in accordance with international biosecurity
guidelines such as those recommended by DuPont Animal Health Solutions.
6: Recording
A complete set of records is important and forms part of a quality scheme. Records will be
kept to show that biosecurity procedures are in place and are being implemented correctly.
Further records will be maintained on what products were used, critical limits, cleaning
schedules and any corrective action taken.
7: Verification
Tests and procedures will be implemented to ensure that the HACCP system is working
properly. The audit is often external and may include verification of dilution rates,
application rates and bacteriological tests.
Prior to the fingerlings being moved to us from Pure Ocean’s hatchery to the Brightwater
Aquaculture grow-out farm, a health status inspection will be conducted by a suitably qualified
veterinarian. Once certified disease-free, the fish will then be considered safe for stocking into the
Brightwater Aquaculture grow-out systems.
Dr Vine from Brightwater Aquaculture has a long-standing relationship with South Africa’s top fish
parasitologists and aquatic veterinarians.
The Company is mindful of the role that these
professionals have to offer and is dedicated to ensure that this component is not neglected in the
aquaculture of their fish.
3.3.2
Harvesting and Processing
When the fish reach market size they will be euthanasiad by anaesthetic overdose with AQUI-S®, a
FDA approved anaesthetic for harvesting salmonids. The fish will then be placed into an ice-slurry
and transported to a fish processing plant. In the near future, the ELIDZ plans to build a SABS/HACCP
approved processing plant within the ELIDZ but in the interim, fish will be processed offsite at one of
the processing plants in Port Elizabeth or Cape St Francis.
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3.3.3
Traceability
The current legal size limit for the recreational fishing of dusky kob is 50cm. Unfortunately this is
much larger than the market size fish produced by Brightwater Aquaculture after about one year of
growth (approximately 1kg). This dilemma was a major cause for concern for Marine & Coastal
Management (M&CM) as it potentially opens the door for unscrupulous fishermen to sell undersize
fish. As a result, industry has worked closely with M&CM in developing a traceability protocol
whereby an individual fish can be traced back to its source of origin (i.e. parent hatchery broodstock)
along with their history of disease treatment, grading, feeding regimes etc. Simply put, the lifehistory of each fish can be tracked from who its parents were to which restaurant purchased it with
all the details in between (i.e. details on the source and ingredients in the feed, incidence and
treatment of any encountered disease). Monthly production and stock reports are required by
Government to ensure accurate monitoring and tracking of the fish through the production cycle.
Once fully operational, Brightwater Aquaculture will purchase a sophisticated traceability monitoring
programme (such as traceall) which will not only service the needs of Government but can also be
used as a production planning and implementation tool.
3.4 Water quality requirements, abstraction & discharge
3.4.1
Water Quality Requirements
The average sea temperature in East London is around 19 °C. As the Brightwater Aquaculture farm
will be on 90% recirculation, the ability to retain heat is enhanced. In addition to this, heat
generated from pumps and other farm equipment will be harnessed and transferred to the seawater
which will allow the farm’s water to be maintained in excess of 22 °C. The desired temperature of
around 23° C will therefore require no additional heating to maintain a constant temperature in the
system tanks. During summer, ventilation fans situated in the roof of the tunnel will be turned on to
help cool the facility and maintain the water temperature within an acceptable range. The water
requirements of the dusky kob are depicted in Table 5.1.
Table 5.1: Preferred water quality parameters for dusky kob, Argyrosomus japonicus.
Parameter
Value
Preferred temperature range
18 - 27 °C
Bernatzeder 2005
Optimal Temperature for growth
25.6 °C
Collett 2007
Optimal temperature for FCR
22.7 °C
Collett 2007
Salinity
15-35 g.L-1
Bernatzeder 2008
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Oxygen
>5 mg.L-1
Halley 2007
Ammonia
<1 mg.L-1
Collett 2007b
pH
≈8.2
Bernatzeder 2008
3.4.2
Water Abstraction
Seawater will be supplied by the ELIDZ from the newly built seawater supply reservoir. Seawater is
abstracted from submerged beach wells in front of the IDZ and pumped up to the reservoirs. The
water then flows by gravity through a seawater supply line which distributes the water to all
mariculture zoned sites in the IDZ. The IDZ seawater supply line enters at the bottom boundary of
the sites. To take advantage of the gravity pressure from the IDZ reservoir, the Brightwater
Aquaculture seawater treatment and storage facility will be built at the top of the site (near the
road). Water will be fed from the reservoir through a series of sand filters and will then be
disinfected using ozone. After treatment the water will be fed into an onsite storage facility that will
be large enough to ensure water requirements for the farm for a period of 24 hours.
The raw seawater requirements proposed below are those required the by the venture and are
calculated according to the mass balance equations and specific design of the production system.
We intend to initially farm approximately 500 ton per year of marine finfish on erf 60875, at an
initial stocking density of 40kg of fish per 1000 litres of seawater (kg/m3). The stocking density of 40
kg/m3 is, in our opinion, a minimum economically viable stocking density and it is envisaged that it
will be increased during the two year trial period to up to approximately 60-80kg kg/m3, in effect,
doubling the production output of the farm to 600 ton per year. This increase in stocking density will
have no effect on the raw seawater requirements (litres per second), or footprint of the farm.
The Brightwater Aquaculture system has been designed as a 90% recirculation system with a daily
seawater replacement of 10% of the total volume of the system. This may change over time, as the
bio-filters mature and staff experience increases, to a 95%, or more, recirculation system with a 5%,
or less, daily seawater replacement. As this recirculation efficiency improves, we will continue to use
the volume of raw seawater as proposed below, and hopefully increase yearly production without
needing to increase raw seawater requirements.
We have calculated raw (replacement) seawater requirements as follows:
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Larval, juvenile & grow-out tanks to produce 500 ton of fish per year – VOLUME – 3 000 000
litres;
Various bio-filters – VOLUME – 600 000 litres;
TOTAL volume for 500 ton/yr farm = 3600 000 litres
At a 10% raw seawater replacement per day we will require an uninterrupted supply of 4.16 litres
per second and an additional 0.5 litres per second contingency supply for routine tank maintenance,
per 500 ton of marine finfish produced per year. The farm will therefore require a constant
minimum of 4.56 l/sec. The ELIDZ have committed to being able to provide erf 60875 with a
maximum constant supply of 10.8 l/sec and an emergency supply of up to 16.2 l/sec.
3.4.3
Water Discharge
Waste or used seawater from the farms will be discarded through the BCM invert sewer system
which flushes the sewerage to the Hood Point sewerage system. Before leaving the farm, all water
will be passed through geotech bags to collect as much of the particulate matter as possible before
discharging the water into the sewer system. The geotech bags and solid waste will then be
discarded according to BCM waste disposal regulations.
3.5 Risk Register and Mitigation Plans
4
Financial Information
The Financial Model is based on the following assumptions:
Ratio: Debt/Equity
Equity Funding Required
Loan Funding Required
Interest Rate
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31 445 286
48 000 000
9%
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4.1 Funding requirements
The total funding requirement for the 500 ton facility is R79.5 million, subject to a 10% variance, to
be accessed over a period of 20 months. The funding amount is seen as seed capital with R65.2
million being used to fund CAPEX infrastructure and R14.2 million being used for operating capital.
Once production has reached a consistent 500 tons per year and all system design and production
management details have been optimised, expansion of the farm to +1 500 tons per year will be
initiated as follows:
Tonnage Produced
1,600.00
1,400.00
1,200.00
1,000.00
800.00
600.00
400.00
200.00
0.00
Yr1
Yr2
Yr3
Yr4
Yr5
Yr6
Yr7
Yr8
Yr9
We have taken a prudent approach to the achievement of the 1500 ton facility in year 9, however if
favourable economics prevail with market demand and the technical capacity to achieve the
targeted 1500 ton is available the model will be revisited to achieve this target earlier.
The financial model developed which incorporates all aspects of the planned mariculture operation,
has been based upon access to capitalisation funding for a period not less than 5 years but
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preferably between 6 and 9 years. To maintain sufficient cashflow, the venture will require access
to financing/a facility over a minimum period of 5 years with excess/unused funds being paid into
the facility on a monthly basis to directly manage interest costs over the period of the loan. This
efficiency is required to enable the available cashflows to support the 500 ton venture until its time
of self-sufficiency which has been modeled to be well within the first 5 years of operation.
After the initial capitalization period of the venture is over, the business will endeavor to structure
its capital financing to achieve the best blend of debt vs. equity financing. Should the original
financing agency/partner wish to maintain a relationship with the company at this point, we would
favorably consider extending our relationship to the degree that it fits with our optimum debt equity
financing model. We would expect that at that time, the financing would take the nature of
collateralized debt due to the business having developed a robust asset base and operating track
record.
This efficiency is required to enable the available cashflows to support the 500 ton venture until its
time of self sufficiency which has been modelled to be well within the first 5 years of operation.
The following financial ratios can be used to help demonstrate the business model –
4.2 Projected Cost and Returns
The model below demonstrates our growth patterns, costs are incurred in the previous growth cycle
to achieve current growth cycle outputs, i.e. costs of increasing the yield tonnage begin to be
incurred in the growth year prior to taking the product to market.
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4.3 Net Present Value
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4.4 Key Ratios
4.5 Income statement
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4.5.1
Income Generation
We have based our revenue forecast on the supply of product Free on Board (FOB) East London
Airport, gill and gutted for the both national and international markets. We have in our possession
two letter of intent for the international markets, copies are below. The pricing of the product is
based on international average prices discounted by 20%. The mean market price of meagre coming
from the capture fisheries varied little between 1985 and 1991 (€2–4/kg) but it increased from 1992
(€4.5–6/kg). In 1996 prices dropped to €4–5/kg, due to the increased availability from large
Mediterranean catches, and remained relatively stable until 1998. Following low catches in 1999,
prices suddenly increased to €6/kg. Since then, there has been an increase in demand for fish
weighing more than 2 kg, which is sold at €7–12/kg.
http://www.fao.org/docrep/013/i1675e/i1675e02.pdf. The following assumptions have been made:
R74.95 per kg
R89.99 per kg
Cape Town – Oceans Edge Retail
East London – SPAR
August 2010
August 2010
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R89.99 per kg
R129.99 per kg
East London - Pick n Pay
East London – SPAR
September 2010
September 2010
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4.5.1.1 Letter of intent:
Unick Foods (Pty) Ltd
Corner of Adam & Argon Str.
Whale Park 12
Hermanus
7200
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________________________________________________________________________________
Dear Niall,
As I said Unick Foods (Pty) Ltd supply live, fresh and frozen seafood products to the upper market
restaurants on a daily basis. Unick Foods was established in 2008 and has grown tremendously since
then. We are based in Hermanus where our distribution network starts.
We would like to start with a daily fresh fish distribution in the Western Cape. As per our discussion
we know that the plate size (400-500g) Dusky Cob would work for the restaurants we supply. The
fresh fish shops will go for the bigger sizes. The most important factor would be Price and
Sustainability.
The demand for Cob is huge in the Western Cape; the big question everybody asks “is it green on the
SASSI list”? We are very interested in your proposal at about R45/kg negotiable. The only way we
will agree on doing business is that we want the sole mandate for the Western Cape. (Will discuss it
in a meeting).
Our network of restaurants would like a letter to state that your fish is green on the SASSI list. We
will also need the necessary health requirements certificates.
I would like to set up a meeting with the guys on the farm once we are satisfied with the product
(samples).
I trust that you find the above in order as we discussed in our meeting.
Kind Regards
Leon Douglas
General Manager
Tel : 028 313 1501
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Fax: 028 313 1501
Cell: +2782 554 9385
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4.5.2
Operational Expenditure
Operational cash flow (OPEX) requirements of the facility from construction to the sale of the
first crop are expected in year three are estimated as follows, with further details set out in
Appendix C1:
4.5.2.1 Fish Feed
Fish feed is the biggest single contributor to operational expenditure. We have assumed a food
conversion rate (FCR) of 1.15 which means that for the production of a 1kg fish we will need to feed
them 1.15kg of feed. The FCR varies between quality of feeds, with cheaper feeds going up to FCR’s
of 1.5 and above. However the trade off is between lower fish feed costs versus increased logistic
costs and waste management.
We have utilised the 5 year graph for fish meal and have used the average price for the period
January to June 2012 for our calculations. The average price has been utilised which includes
allowances for logistics.
Kob are carnivorous and therefore tend to have high animal protein requirements. This protein is in
the form of fishmeal which may contribute up to 60% of the dietary ingredients. With the high price
of fishmeal, research into alternative protein sources has seen great advances where, for example,
the salmon industry have gone from a 45% fishmeal diet in 1995 to less than 20% in 2010. A similar
scenario in the reduced dependence on fishmeal is anticipated for the other major aquaculture
species in the short to mid-term future.
Fishmeal is traded as commodity and must be seen as an opportunity for local
manufacturers to enter into.
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4.5.2.2 Research and Development
The company wishes to become known as an organisation positioned at the cutting edge of research
within the mariculture industry. To achieve this and to ensure that growth into the future is
sustainable a large focus of the organisation will be on research and development that will include
transfer of knowledge both from the venture to Rhodes University and vis a versa. This research will be
carried out jointly by our own staff and researchers and students from Rhodes University. This will not
only ensure that technology transfer takes place between our business and the researchers, but is will
ensure that the research outcomes are successfully incorporated into the production schedules. In
addition to technology transfer between industry and researcher, this approach will also ensure that
our staff are trained in the latest developments in the industry and it will give University students
valuable exposure to industry
1. Feed
a. Feed formulations - Feed remains the single largest cost in producing kob
(approximately 30% of operating costs) and the quality of the feed and its ingredients
governs the growth and feed conversion efficiency of fish. Rhodes University is
committed to developing a locally produced feed that equals the quality of the best
imported feeds. Our business’s research and development plan will compliment this
existing programme by making it possible to test and improve these formulations
under farm conditions.
b. Feeding strategies - We will also develop and optimise feeding strategies and
techniques at different stages of the production cycle that will be aimed at reducing
feed waste and further improving production efficiency.
2. Improved Production
Production efficiency can only be improved through improving management efficiency to a
certain point. Further improvement requires an alternative approaches and innovative ideas
– this is when research and development and “thinking out of the box” start to really play a
key role. For example, fish that are stressed will do not grow as fast as unstressed fish and
they are more susceptible to disease. Examples of the kinds of research and development
areas that we will focus on include:
a. Developing techniques that will reducing handling stress of fish when being moved
from one tank to then next;
b. Improving or developing alternative management procedures that reduces handling of
fish altogether;
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c. Improved fish grading techniques;
d. An early warning system for fish disease outbreaks;
e. Efficient and possibly alternative methods of treating fish when they are subject to
disease outbreaks;
3. Development of new species
To maintain our position as leader in the industry, it will be necessary to develop
technologies to culture other endemic marine species.
a. This will required holding tanks for bloodstock developing broodstock management
strategies and breeding techniques (these alter considerably for different species).
b. This will also require developing technologies needed to rear larvae and take them
successful through metamorphosis to first feeding, and to weaning them onto artificial
diets.
Our own staff will be trained in these techniques and will work closely with researchers from
Rhodes University in developing these programmes.
4.5.2.3 Other operational expenditure
Other operational expenditure has been calculated as a percentage of expenditure based on similar
operations in South Africa. Electricity is the main cost driver and is an important opportunity to
establish industries within South Africa to supply long term sustainable power to the reticulation
farms based on green technologies.
The following costs have been accounted for in the model:

Fingerlings Costs – cost of initial purchase of fingerlings and the cost of the hatchery.

Oxygen Costs.

Chemicals.

Electricity – with a cost of approximately OMR1.95 million per annum for 11 MW of constant
power.

Communications.

Security both physical and bio security.

Insurance.

Office Supplies.

Salaries and Wages.

Directors Remunerations.

Human Resource Management.
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
Research and Development.

Marketing.

Maintenance.

Audit Fees.

Testing.

Delivery/Vehicle/Packaging.

Veterinary.
Cost savings can be achieved in terms of OPEX requirements via the following:

Bulk electricity provision.

Support of green technology power generation.

Zero rating of fish food imports until local production is secured.

Zero Rating of chemical and oxygen requirements until local production is sufficient
to meet demand.
4.6 Forecast Balance Sheet
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5
Appendices
5.1 Detailed Cash Flows Year 1 to Year 8
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5.2 Farm Construction Quotation
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5.3 Shareholder CV’s
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5.4 Shareholder Declarations
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5.5 Shareholder Agreement
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