Missing protein may have put kingfish off their food

Q: Is Clean Seas seeking compensation for the kingfish losses?

Yes. Clean Seas has sought compensation worth tens of millions of dollars and has issued formal dispute notices to its two main feed suppliers, saying it will invoke formal dispute resolution procedures to try to reach a commercial compromise over the claims.

IT WAS the feed all along, it seems. The pioneering aquaculture firm Clean Seas Tuna has sought compensation worth tens of millions of dollars from two suppliers for the loss of kingfish devastated by the deficiency of an amino acid, taurine, in their feed.

By InvestSMART · 15 Nov 2012

By InvestSMART ·
15 Nov 2012

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IT WAS the feed all along, it seems.

The pioneering aquaculture firm Clean Seas Tuna has sought compensation worth tens of millions of dollars from two suppliers for the loss of kingfish devastated by the deficiency of an amino acid, taurine, in their feed.

The chief executive, Craig Foster, said Clean Seas had issued formal dispute notices to its two main feed suppliers after receiving independent legal advice and assessment of kingfish feed protocols in Japan.

"The board has determined to invoke formal dispute resolution procedures with both feed suppliers to attempt to find a commercial compromise of the claims the company considers it has against both suppliers," Mr Foster said in a statement.

Clean Seas would not identify the companies it had notified but industry sources said the listed Ridley Corporation and Tasmania's Skretting were the two major feed suppliers in Australia. Neither Ridley nor Skretting returned calls on yesterday.

Mr Foster said it had taken months to determine the cause of the kingfish kills that struck Clean Seas this year. By adding taurine to the feed, he said, "simply, empirically, we can see we've reversed the whole health problem".

Clean Seas shares have fallen from a year-high of 8.3? in February to 2.4? at yesterday's close, up 0.2?.

Mr Foster said the dead fish stocks themselves were worth only a few million dollars but there was also lost productivity from the fish that didn't go on to grow. He would not quantify the total damages claim but said it was "tens of millions of dollars".

Mr Foster said further independent testing would be needed. At this stage blaming the feed deficiency was "only our opinion".

Clean Seas also said on Wednesday it had achieved early spawning of its southern bluefish tuna brood stock, and was confident of achieving viable fingerlings for transfer to sea cages next month.

A BBY analyst, Dennis Hulme, welcomed as "very positive" both announcements, on the feed deficiency and tuna propagation. Clean Seas could now "get back to being a money-making business ... [and] potentially a takeover target", he said.

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Frequently Asked Questions about this Article…

What caused the recent kingfish deaths at Clean Seas and how was it discovered?

Clean Seas says the kingfish deaths appear linked to a deficiency of the amino acid taurine in their feed. After months of investigation the company added taurine to the feed and observed an empirical reversal of the health problems, although it says further independent testing is needed and blaming the feed is currently "only our opinion."

Is Clean Seas seeking compensation for the kingfish losses?

Yes. Clean Seas has sought compensation worth "tens of millions of dollars" and has issued formal dispute notices to its two main feed suppliers, saying it will invoke formal dispute resolution procedures to try to reach a commercial compromise over the claims.

Which feed suppliers has Clean Seas notified about the feed deficiency?

Clean Seas would not publicly name the suppliers it notified. Industry sources cited in the article identified the listed Ridley Corporation and Tasmania’s Skretting as the two major feed suppliers in Australia, though neither company commented in the story.

How large were the dead fish losses and what other financial impacts did Clean Seas report?

The company said the dead fish stocks themselves were worth only a few million dollars, but it pointed to additional lost productivity from fish that didn’t go on to grow. Clean Seas did not quantify the total damages but described its claim as being in the "tens of millions of dollars."

How has the news affected Clean Seas' share price?

According to the article, Clean Seas shares fell from a year-high of 8.3 in February to 2.4 at the most recent close (the article notes the share price was up 0.2 at that close).

What positive operational news did Clean Seas report for its tuna business?

Clean Seas said it had achieved early spawning of its southern bluefin tuna broodstock and was confident of producing viable fingerlings for transfer to sea cages next month — a development the company and at least one analyst called encouraging for future productivity.

What do analysts say about Clean Seas’ prospects after the feed issue and tuna propagation progress?

A BBY analyst, Dennis Hulme, described both the feed-deficiency progress and the tuna propagation news as "very positive," suggesting Clean Seas could return to being a money-making business and could potentially become a takeover target, according to the article.

What are the next steps investors should watch regarding Clean Seas' feed dispute and recovery?

Investors should watch for results of further independent testing to confirm the cause of the kingfish kills, any developments in the formal dispute resolution or compensation negotiations with feed suppliers, updates on tuna fingerling transfers and survival, and how these outcomes affect the company’s productivity, costs and potential legal liabilities.