Aker BioMarine and its extraction partner Naturex have finalized a deal to build a new krill oil production facility in Texas to augment existing product capacity in Valencia, Spain. The new facility is Aker’s first in North America, currently its most important market.
The deal takes advantage of $11 million in federal financing and makes use of an existing facility that was once a Nestle ice cream plant, Todd Norton, vice president of new business development for Aker, told NutraIngredients-USA.
“The relations have been beneficial for both parties in our present setup (in Spain) and we have basically replicated that in our US operation,” Norton said.
In February 2013, Naturex formed a joint venture with Aker BioMarine Antarctic, the world’s largest krill harvester. The new entity, Aker BioMarine Manufacturing LLC (AKBM Manufacturing) combines Aker BioMarine's know-how in sustainable and traceable krill sourcing with Naturex's extraction expertise.
Port site essential
The new production Houston has more than 145,000 square feet of manufacturing space. When it comes on line in June 2014 it will employ approximately 50 people. Also important to the choice of site, in addition to the financing and a suitable existing building, was its proximity to a major port, Norton said. The port of Houston-Galveston is the second largest in the US, an important consideration in the transport of krill raw material from Aker’s transshipment point in Uruguay. Other US locations close to port cities were studied, Norton said, but ultimately the Houston site won out.
Norton said the new facility was needed because of the growth in demand for Aker’s krill oil products. That growth can be expected to accelerate now that the major krill players have ended their patent dispute and have come to royalty agreements with Canadian firm Neptune, the holder of the most senior patents in the sphere. This means that funds that in the past have gone to lawyers can now be used for promotional activities to enlarge the overall sector.
But Neptune was involved with another motivation for the new facility, Norton said. An explosion and fire that destroyed Neptune’s lone production facility in Sherbrooke, Quebec in November of 2012 (and unfortunately resulted in the deaths of three workers). In the interim while the plant was rebuilt Neptune struggled to maintain market share by a combination of steep margin concessions and a production deal with Norway-based Rimfrost, all of which proved costly. Neptune at least temporality lost some customers (Jameison Laboratories of Canada among them) and has yet to reenter production with its own facility, though that is said to be imminent. The incident put all of the players in the sphere on notice as to similar risks they might be running.
“Part of the new production facility is to protect our supply chain and protect our customers. Now we have peace of mind,” Norton said.
The federal New Markets Tax Credit program was established by Congress in 2000 to encourage investment in and economic growth in low income communities based on several criteria. Houston’s media household income is about $32,000; in 2012, the median household income for the US was about $51,000.
"The NMTC program represented a very good opportunity enabling us to obtain partial financing from high quality investors for a growth-generating industrial project within the framework of our joint venture with AKER BioMarine Antarctic", said Naturex's CFO, Thierry Bertrand Lambert. "We are very proud to be able to contribute to this region's economic development by creating long-term industrial jobs and benefit from its ideal geographical position for developing the growth of our products in global markets."