Massive prawn farm in northern Australia found to be 'unviable'

The Northern Territory project has been declared "not financially feasible" and "unviable in its current form" by the company behind the proposal.

The share price of ASX-listed Seafarms fell sharply after the dire financial forecast was released late last week.

Lagoons are already in construction for Project Sea Dragon at Legune Station, a cattle property near the Western Australian border, southwest of Darwin.

The 178,870 hectare property has been part of the AAM portfolio, via its Pastoral Development Trust, since 2018.

The NT Government has already invested millions in the project hoping the project would produce its promised 1500 jobs.

Seafarms hopes to still proceed with a pared back version of the prawn farm if it can maintain the interest of investors.

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Seafarms had wanted to build a 10,000-hectare black tiger prawn pond project across 10,000 hectares in an almost $2 billion project to produce 6000 tonnes of prawns per year.

The company had ambitious plans to scale up and produce more than 100,000 tonnes of prawns every year.

The NT Government invested more than $56 million in building roads to support the project including upgrades to Gunn Point Road, an access road to the Point Ceylon, Bynoe Harbour site and upgrades to the Keep River Plains Road to ensure year round access between Kununurra and Legune Station.

The company on Friday said it was the project's remoteness which was now a problem.

"The existing scope cannot be completed for targeted costs or achieve target completion dates, and the project currently involves unacceptable risk," Seafarms said in a statement to the ASX.

The government said the project had the potential to create around 1500 ongoing jobs, of which around 1000 would be located in the NT (700 at Legune Station and 300 at a Darwin-based hatchery and breeding facilities, along with a main office in Darwin).

In December 2019 the Indigenous Land Use Agreement for the Legune Grow Out Facility was registered by the National Native Title Tribunal, with Native Title Holders having used some of these funds to upgrade the Marralum Outstation.

At the time, Chief Minister Michael Gunner said: "Project Sea Dragon is exactly the kind of major project the NT needs. It will create up to 1500 permanent jobs, and diversify the Territory's economy by delivering a new industry for Australia.

Today construction has been put on hold until its production plan can be tested over the next three years.

Seafarms said a pricing review found they would need "significant" international markets for prawns as the remoteness would likely lead to price pressure in the domestic market where the project was no longer "considered feasible".

The company said its remote location posed "high logistics and labour costs".

The company also said there could be lower priced international competitors who would take their intended market share.

Seafarms said it was still intending to deliver the project but needs to lower the cost of production.

It will also continue to supply fresh and frozen, cooked product to customers from Queensland.

It has a hatchery, at Flying Fish Point and grow-out facilities, including 148 ponds covering 160 hectares across three farms in Cardwell and Ingham, and a processing factory in Cardwell.

Seafarms said its Legune Station operations would remain on hold until they completed a farming pilot, which depended on further investment, and could take three years to develop.

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