CLEAN Seas Tuna Ltd. of Port Lincoln, South Australia, is looking to begin commercial sales of farmed bluefin tuna next year, targeting Europe and the U.S. market.

“We could do it [go commercial] in as soon as three months, but it could take up to 12,” says the company’s chairman Hagen Stehr.

Port Lincoln’s tuna ranching industry had been awaiting further news of the progress the Stehr Group company Clean Seas Tuna Ltd. is making in propagating its own Southern bluefin tuna (SBT).

The aim of the venture is to more than double the present tonnage of SBT available for sale at Port Lincoln from the present wild caught/on-grown production.

Says Hagen Stehr: “Breeding southern bluefin is “like climbing Everest. There is danger every step of the way and, even if you are 100 metres from the top, things can still go wrong.”

A recent deal to co-operate on research and personnel with Japan’s Kinki University, which is the first institution to commercially rear bluefin, moved Clean Seas within “five metres” of the summit, he says.

Moving towards commercial breeding is a case of utilising “the means and ways” used by Kinki University to keep “millions of larvae alive” instead of thousands, says Hagen Stehr.

Trips to Kinki University’s site in Japan have already inspired changes at Clean Seas’ Arno Bay hatchery. Scientists from Japan were due to arrive midway through November to work at Arno Bay, which is the largest land-based breeding facility in the southern hemisphere.

Three years into the main project, scientists based at the company’s research centre at Arno Bay, on South Australia’s Eyre Peninsula, succeeded in getting wild-caught SBT (Thunnus maccoyli) to spawn.

“We have eggs” is how this breakthrough was announced in March this year to Hagen Stehr.

In October 2005 Hagen Stehr, a former fisherman and abalone diver who became a pioneer of Port Lincoln’s tuna ranching industry, had announced “a unique opportunity to participate in the development of the first specialised SBT hatchery and grow-out business in the world.”

Clean Seas Tuna sought A$18 million in ordinary shares and converted notes to help finance the project.

The company had already been working on the venture for some six years and told potential investors it had made “significant advances in several areas, including broodstock management, on-shore fish transfer, fish husbandry practice and the pelletised feeding of kingfish and mulloway propagated from its own broodstocks.

Clean Seas Tuna’s next step to achieve its goal to propagate SBT was to upgrade its on-shore broodstock facility at its Arno Bay site.

Fertislised SBT eggs produced are planned to be transferred to the hatchery for the controlled production of SBT fingerlings “by the adaptation of the proven protocols for the other species already being propagated.”

The directors stated in the prospectus of October 2005 that they “believe that, over the next years, this should lead to the establishment of an exciting and long-term commercially viable SBT business.”

The A$5.45 million SBT broodstock facility went ahead and A$2.33 million was earmarked for operating expenses. An A$4.25 million Austindustry Commercial Ready grant was applied for from the Commonwealth Government.

According to the prospectus, the initial plan is to hold up to 750 tonnes of SBT in offshore cages in Arno Bay.

“Over the estimated three-year period, Clean Seas Tuna proposes to finalise its strategy for full-scale commercialisation of SBT aquaculture.

“If successful, the commercialisation of the SBT aquaculture business will most likely involve a second capital raising in financial year 2009.

“The aim would be to commence full-scale production of 10,000 tonnes of SBT from Arno Bay from financial year 2010 onwards.”

The Arno Bay hatchery has direct access to clean waters from the lower Spencer Gulf and water is pumped into the hatchery via a four megalitre settlement dam.

“The only known spawning grounds for SBT are located in the Indian Ocean between the north-west coast of Australia and Indonesia.

“SBT spawn in the wild between September and April each year. The eggs are estimated to hatch within two to three days. SBT larvae’s main source of feed is copepods.

“At approximately 20 days, the SBT larvae become fingerlings. These fingerlings have a wide source of feed, including fish larvae and other juvenile fish.

“SBT typically reach 15 kg. weight over the next two years. This size SBT is the principle wild catch of the Australian SBT industry.

“Clean Seas Tuna believes that SBT become sexually mature at between nine and 12 years of age in the wild.”

The company set out the need to propagate SBT by stating in the prospectus: “The official annual global wild catch has declined from 80,000 tonnes in the early 1960s to 14,000 tonnes per year. The Australian SBT wild catch quota is 5265 tonnes per year. Once caught, SBT are farmed in offshore cages at Port Lincoln for three to eight months.

“This involves feeding the SBT pilchards to increase their weight and fat content.”

Clean Seas saw the need to propagate its own SBT to:

Provide an alternative to the need for wild-catch SBT quota;
Enable year-round production of SBT; and
Lower the overall cost of production of SBT.

Propagating its own tuna will enable Clean Seas Tuna to escape the wild catch quota system assuming it maintains its own breeding stock program.

Early trials in 2004/2005 were carried out at Arno Bay to transfer broodstock from sea cages at Arno Bay to the onshore 50 x 50 x 4 metre settlement dam, and one fish to the 50 x 20 x 2 metre holding pond.

According to Clean Seas Tuna: “As part of these trials, all but one of the fish were successfully re-transferred back to the holding cages at sea. The results have enabled Clean Seas to better specify the long-term shore-based SBT broodstock recirculation system.”

The plans were developed to build two in-ground 25 x 6.5 metre holding tanks of approximately three megalitres each to be housed in their own light and temperature controlled sheds.

Each tank needed the support of its own water treatment recrculation tank housed in an adjoining building.

The SBT broodstock system was designed by UNI-Aqua of Denmark which has already installed a second similar system in Europe.

An ambient spawning temperature of in excess of 25oC is seen as being required to facilitate spawning.

New investment needed soon

While the Clean Seas Tuna prospectus stated: “The earliest opportunity to produce fertilised SBT eggs at Arno Bay is in late 2006, Hagen Stehr – who rejoices in the nickname of The Kaiser – announced the feat had been achieved on March 2, 2008.

The prospectus also stated: “The company’s business plan anticipates problems with the initial SBT breeding runs as hatchery staff learn the behavioural traits of SBT larvae and fingerlings.”

The prospectus continues: “Once fingerlings have been produced, Clean Seas will refine its business plan to maximise returns for shareholders.”

Infrastructure requirement to produce 10,000 tonnes of on-grown SBT a year would cost an estimated A$50-A$75 million, Clean Seas Tuna had told investors, although it did not guarantee this level of production.

Clean Seas is looking for “cornerstone investors” that “understand the seafood business” in Europe and the United States to help develop its bluefin tuna farming operations.

Clean Seas “wants people who can provide financial backing and marketing assistance” to launch farmed bluefin when it goes commercial. The group had looked at working with the recently nationalised Icelandic bank Glitnir, said Hagen Stehr.

Shares in Clean Seas took a recent dive down to AUS$0.32 ($0.22/€0.17) and have since recovered to AUS$0.45 ($0.31/ €0.24), which Hagen Stehr said is because a major shareholder had to sell out.

“There were a couple of institutions that got into trouble and had to sell a lot of shares. When it is a small stock like ours, the shares will soon come down if this happens.”

Clean Seas was advised by feed specialist Skretting on the food conversion ratio for SBT as this company had carried out commercial trials with semi-moist pellets for feeding bluefin.

Skretting advised dry pellet feeding from the date of weaning (20-25 days) with the range of 2-3:1.

A target market for propagated SBT is Japan, as Clean Seas estimated that this country’s demand for sashimi grade tuna is between 450,000 and 500,000 tonnes a year.

Clean Seas expects to sell its propagated and on-grown SBT via its long-standing contacts in Japan.

Clean Seas Tuna set out the risks to potential investors as being “speculative.” It listed the risks as including technical, price fluctuations, exchange rates, input and product prices, equipment failures and unexpected adverse weather.

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