PUERTO NATALES, Chile -- Blumar is just months away from harvesting its first Atlantic salmon in Chile’s southernmost Magallanes, joining a select group of companies operating in the region 

Mina Elena, a site in the Skiring fjord, will deliver its first harvest in November, regional manager Ignacio Covacevich told Undercurrent News. The company will stock two new sites in the third quarter of this year and is making the engineer to build a turnkey recirculating aquaculture system (RAS) hatchery just south of the region’s capital, Puntas Arenas. 

Blumar will eventually produce about 1,500 metric tons a month from Magallanes, a region that has become an exclusive hotspot in Chile’s salmon industry because the absence of salmonid rickettsial syndrome (SRS). That means salmon can be grown without antibiotics. 

Blumar, through its Magallanes brand BluRiver, will join Empresas AquaChile, Australis Seafoods, Cermaq (owned by Japan’s Mitsubishi), and Nova Austral in operating sites in this region located 1,000 kilometers (623 miles) south of Puerto Montt, Chile’s traditional salmon farming hub. 

“The production in general is much more optimal than in other regions,” Covacevich said. “The fact that we have waters with low salinity and the non-proliferation of lice makes us a very favored region.” 

Blumar is supporting a motion that is spearheaded by a regional association of producers, the Asociacion de Productores de Salmon y Trucha de Magallanes, to isolate Magallanes from the north in terms of biosecurity in a five-year period, Covacevich said. That means building hatcheries to end the transportation of smolt in wellboats from the north, besides other measures.  

Santiago-based Blumar along with Australis Seafoods is currently importing smolt from further north, albeit with several water sample checks at various points as well-boats navigate the fjords from Puerto Montt to the bottom of Chile. Using automated feeders provided by Norway’s Steinsvik, Blumar is achieving extremely low feed conversion ratios (FCRs) of 1.03 of feed for every kilo of salmon produced in the Skiring fjord. Australis Seafoods is also producing with an FCR of 1.02 in the same fjord, a site manager told Undercurrent during the same visit to the region. These FCRs are typically lower than the industry average which is closer to 1.15/1, according to feed provider Skretting. 

Blumar’s hatchery will be its first foray into smolt farming, having relied on third-parties for the supply of fish grown from egg throughout the freshwater phase. The company is now producing its smolts in several open-flow hatcheries in the Lake Region. The plan is that the Magallanes RAS hatchery will be completed by 2022, with a production of 6 million smolt annually. Denmark’s Billund is also finishing a RAS hatchery for Nova Austral. 

The necessity to create a biosecurity firewall between Magallanes and the rest of Chile has been heightened recently following a scandal in which Nova Austral mis-reported mortalities at one of its sites in Magallanes. Nova Austral said that unusually high moralities at one of its sites, which was allegedly concealed from a company-wide report, was down to the quality of smolt imported from further north. 

Chilean aquaculture and fisheries regulator Sernapesca filed a claim with an environmental court to fine Nova Austral and pledged to step up inspections of sites in Magallanes. Nova Austral also lost its right from the regulator and the Aquaculture Stewardship Council to brand its Magallanes-grown salmon as antibiotic-free, a label that carries a significant price premium in US markets. 

The price premium is a key cost advantage that is offset by some of the heightened costs of operating in the Magallanes region. Blumar has had to learn how to store up extra feed requirements in case vessels can’t make the 5 to 15-day voyage from the north because of adverse weather conditions, Covacevich said. It is also more complicated to bring down engineers and skilled technicians for site visits as they are all located further north, he said. The weather in the extreme south of Patagonia can be extremely challenging during the Southern Hemisphere between June to August and gales can blow up to 100 kilometers per hour, he said. 

Blumar’s strategy in Magallanes also involves building a processing facility with Multiexport Foods, which will also commence salmon farming in the region. Work started on the plant in March and will be ready in March next year, Covacevich said. The processing facility joint venture will produce a complete range of salmon products from head-on salmon to frozen and fresh fillets, he said. 

Until earlier this week, Blumar was set to be sold off. However, on Aug. 2, its two main shareholding groups, ‘Las Urbinas Group’ and the ‘Sarquis Group’ -- the latter comprising the Sarquis family which owns the largest stake in Blumar -- announced they had been unable to reach an agreement on the sale process and called it off.