Argentinian venture fills hole in Sealord's net

By Ray Lilley

Friday 12th May 2000

SOUTHERN STRATEGY: Joint greenfields startup carries no baggage from the past

Sealord Fishing Group expects its new "Yuken" Argentine fishing joint venture to turn over $60 million dollars in sales within five years, double the turnover projected for the first year of the multi-million dollar investment project.

With the first of its four factory vessels starting to fish in Argentina's largely untapped hoki fishery two days ago, Sealord chief executive Phil Lough said it was "the missing link in the jigsaw" of its southern hemisphere fish catching strategy.

Intense investigation of the hoki stocks and detailed due diligence on Argentine joint venture partner the Pesel Group confirmed the 50/50 agreement.

It becomes part of Sealord's strategy to develop a global network of deep sea species joint ventures.

Mr Lough said although Pesel had been "financially strained" like all other Argentine fishing groups by the collapse of the country's hake fishery, the joint venture was a greenfields startup that carried no baggage from the past.

The hake fishery had collapsed from overfishing, dropping from more than 900,000 tonnes a year to under 200,000 tonnes, hitting local companies hard.

Yuken had five hoki licences, four factory ships and its links into Sealord's international marketing would provide it access to a customer base already "screaming out for [more] value-added, quality products."

"Hoki, a southern hemisphere species, is the biggest piece of Sealord's balance sheet and our customers want it in value-added form, not commodity form," Mr Lough said.

Sealord's fishery scientists have confirmed the Argentine hoki fishery as the next biggest hoki resource outside that of this country. It is expected to yield a sustainable 250,000 tonnes of hoki a year.

Still largely untapped, it will come within a newly created Argentine quota management system within a short time. This fits into Sealord's strategy of only pursuing fish harvest where governments are serious about managing fish stocks.

Sealord is on the ground floor of the new fishery and clearly expects Yuken's "fishing history" over the next few years will yield a quota allocation when the property rights are assigned by the Argentine government.

"We found a company calling out for help to develop the hoki fishery. This is the next area of growth for Sealord," which would move skills, technology, sea research and factory specialists into Argentina. It is about 15 years behind New Zealand in its hoki handling.

As well as hoki, it gives Sealord access to extra hake and squid resources, complementing its current supply and marketing of those species in high-value markets.

The company is already involved in joint venture fishing and processing in Namibia, Tasmania and Chile, and in fish processing in China, Thailand, the US, Japan and England.

Its turnover reached nearly $520 million last year, up from $300 million five years ago.

Jointly owned by Te Ohu Kai Moana, the Maori Fisheries Commission and BIL, it has rapidly developed as a global fishing company. Mr Lough said all parts of its activities were returning significant profits.

Instability has emerged for the company from two unrelated domestic events.

Founding chairman Sir Tipene O'Regan and other commission members on the board face being replaced over the Maori fish quota wrangle, with the cabinet expected to consider proposals for replacing the commissioners from Maori Affairs Minister Dover Samuels shortly.

Cabinet members such as Sir Tipene's fellow Ngai Tahu and staunch opponent Sandra Lee are expected to oppose his re-appointment.

The other is the government's interference to prevent an offshore investor buying BIL's 50% holding in Sealord, alienating local fishing quota into foreign ownership.

A Sealord business partner, Japan's Nissui fishing company, named this week as a potential buyer of a 24.9% stake to get round foreign ownership controls, is apparently not part of any bid still alive to buy the BIL stake.

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