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Industry Report

A new chapter in
Chilean salmon farming

2019 Copyright IntraFish Media 2019

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at USD $1490.

CHILEAN SALMON REPORT

Contents
Section I
01: Introduction: An industry transformed 4
02: The history of Chile’s salmon sector 7
03: Production and distribution 13
04: Markets 21
05: Consolidation/restructuring 32
06: Regulations to the rescue 41
07: Innovations 57
08: Conclusion: 61
Section II
Company listings 64
Section III
Glossary 75

Lola Navarro, based in London, is a senior reporter at IntraFish

Media covering the global seafood sector, with a special focus
on Spanish-speaking countries. Lola has developed extensive
experience in covering the Chilean salmon sector during her
years at IntraFish after visiting several salmon farms in the
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companies in Chile and its main export market, the United States.

2
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S1– 03 Chilean Salmon Report

In Chile, there are more than 1,300 concessions, of which around 61 percent are not in use. Of the
total, nearly 400 are unusable, leaving 406 usable concessions that are inactive. These unused
concessions could provide an estimated 414,000 metric tons of additional production capacity,
according to Arturo Clement, president of SalmonChile.

Although originally all concessions were granted on the premise they would be used, some
companies hold a large number of unused concessions that under the new growth restrictions are
unlikely to be utilized in the short term. In addition, many of the concessions that were originally
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The map below shows the distribution of the salmon farming industry in the region of Los Lagos
between January and July of 2018.

The dots represent the location of each concession – not its size. The blue dots denote active
concessions during the 6-month period up to July 2018, and the green dots represent inactive
sites. The geometrical shapes enclosing groups of concessions are the ACS, or neighborhoods.
7KH\HOORZDUHDVDUHJHRJUDSKLFDO0DFUR]RQHVIRUPHGE\GLσHUHQWQHLJKERUKRRGV7KHVHGLσHU
from the TMZs as explained above, which are not related to a geographical location, but are
instead concerned with coordinated fallowing periods.

In the Los Lagos region, which extends 220 kilometers, there are 25 neighborhoods and more
than 530 concessions.
DISTRIBUTION
OF SALMON
FARMING IN LOS
LAGOS

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Chile’s salmon output

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\HDUVORQJSHULRGRIðQDQFLDOORVVHVKLJKFRVWVVORZJURZWKDYHUDJHðVKVL]HVEHORZWKRVHRI
competitors, the high use of antibiotics and the high incidence of disease, have led the industry to
agree on the need to grow steadily and slowly.

Production over the years has been volatile in Chile, which resulted in unreliable data on price
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growth has remained stable over the past three years.

CHILEAN Chile salmon production

SALMON
Atlantic Salmon Coho Rainbow Trout
PRODUCTION
INCLUDING ALL 842,000 839,300
792,200 791,000
842,679*
THREE SPECIES
BETWEEN 2013 727,812
AND 2018.
metric tons

2013 2014 2015 2016 2017 2018

Rainbow Trout 153,800 124,500 97,700 84,607 75,000 75,841
Coho 148,100 107,500 135,800 110,980 134,000 117,975
Atlantic Salmon 490,300 610,000 605,800 532,225 582,000 648,862

Source: Sernapesca.

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GLVFUHSDQFLHVLQWHUPVRIVDOPRQRXWSXW)RUH[DPSOH6DOPRQ&KLOHâVKLVWRULFDOðJXUHVVKRZWKH
total salmon production in Chile reached 955,179 metric tons in 2014.

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RISING SALMON
PRICES HAVE Atlantic salmon exports by market value
CONTRIBUTED 4.50
TO HIGHER
EXPORT VALUES. 4.00 $1.73B

3.50 $1.52B
$1.28B $1.29B
3.00
$ 1.09B
$ Billions

2.50 $1.05B

2.00

1.50 $0.73B
$0.6 B
1.00
$0.3 B
0.50

0.00
2010 2011 2012 2013 2014 2015 2016 2017 2018

Latin America Brazil China US Japan Others Russia EU

The United States is the main market for Chilean Atlantic salmon, importing 275,879 metric tons
worth $1.72 billion in 2018.

IT IS BELEIVED Atlantic salmon exports by market

THAT THE US
MARKET CAN 39,688.8, 6% 41,236.4, 6%
CONSUME MORE
SALMON. 63,728.3, 10%

98,992.3, 15%

69,346.2, 11%

44,792.3, 7%
11,436.5, 2%

275,879.2, 43%

Latin America (exc. Brazil) Brazil China US Japan Others Russia EU

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Consolidation/restructuring
The recovery of the industry since 2016 has led to long-term investment plans and to the
stabilization of production enabled by the introduction of new regulations that are in line with the
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The positive prospects and long-lasting measures adopted by the sector provide unprecedented
market security that, in turn, has put the sector in the spotlight for investment.

Of course, the nature of the business and its direct relationship with the environment and
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XQIRUHVHHDEOHVDQLWDU\ULVNVLQDGGLWLRQWRRWKHUULVNVUHODWHGWRPDUNHWDQGFXUUHQF\ñXFWXDWLRQV

$2.2B
These sanitary risks are mostly related to water temperature changes, seismic waves, algal blooms,
the existence of natural predators, oxygen level variations – which can lead to the outbreak and
spread of existing and new diseases -- and biological hazards, mainly bacteria, viruses and
Value of M&A parasites.
activity in the
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Chilean salmon
and to a better preparedness to mitigate against the impact of incidents.
industry in 2018.
Over the years, the Chilean salmon industry struggled with self-regulation measures that gave
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:KLOHDOORIWKHGLσHUHQWRSHUDWRUVKDYHWRGLσHUHQWH[WHQWVòSDUWLFLSDWHGLQWKHXQRUJDQL]HG
growth that took place in Chile over the years up to 2016, there is now a consensus among
producers for the need to regulate growth, and to redistribute salmon concessions to make them
fewer, larger and farther apart. This is one of the ways in which the industry plans to consolidate,
ZLWKGLσHUHQWSOD\HUVUHTXHVWLQJUHJXODWRU\FKDQJHVWKDWDOORZIRUWKLVUHGLVWULEXWLRQ

However, the main stream of consolidation is happening through mergers and acquisitions.
Fostered by the growth restrictions imposed on salmon farming companies with the new
regulations, M&As are the most viable and secure way for a company to increase production
VLJQLðFDQWO\LQDVKRUWSHULRGRIWLPHZLWKRXWDGGLQJSUHVVXUHWRWKHFRXQWU\âVIDUPLQJFDSDFLW\

This is especially the case for those companies with a limited number of concessions that have no
actual opportunity to increase production organically with either of the regulatory options available.

Although consolidation has been well anticipated by industry experts, insiders and analysts, it
has been only recently -- particularly in 2018 -- that M&A activity has really ramped up. In 2018,
following a four-year freeze in M&A activity in the Chilean salmon sector, there were acquisitions in
the industry totaling $2.2 billion.

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SP-SEC-1 Chilean Salmon Report

*OPSL»ZZHSTVUÄYTZWSLKNL
to halve antibiotic use in Chile by 2025
The Chilean association of salmon farmers, SalmonChile, the Chilean Salmon Marketing Council
(CSMC) and the Monterey Bay Aquarium signed a Memorandum of Understanding (MoU) in March
of 2018 to form the Chilean Salmon Antibiotic Reduction Program, with a commitment to reduce
antibiotic use 50 percent by 2025.

All twelve members of SalmonChile will work together on an action plan with guidance from the
Monterey Bay Aquarium. The move is aimed at reaching a Seafood Watch Good Alternative rating
by 2025.

“Never before has our industry made such a bold commitment,” said Arturo Clement, CEO of
SalmonChile. “We are excited to work together as an industry and with the Monterey Bay Aquarium
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,QDGGLWLRQWKH&60&RτFLDOO\DQQRXQFHGWKHODXQFKRILWVQHZ3DWDJRQLDIRFXVHGFDPSDLJQ
“The Promise of Patagonia,” to highlight the conditions of the Chilean southern regions for salmon
farming.

“We are emphasizing the pristine Patagonian region of Chile, where salmon is raised in the pure
coastal Antarctic waters,” said Ricardo Garcia, vice chairman of Salmones Camanchaca and
chairman of CSMC.

The signatories are AquaChile, Australis, Blumar, Cermaq Chile, Cooke Aquaculture, Cultivos
Yadran, Marine Farm, Multiexport, Salmones Austral, Caleta Bay, Salmones Camanchaca, and
Ventisqueros.

Mowi Chile, which acts individually since it departed SalmonChile in 2016, also has a strong
antibiotic reduction program in place.

In 2018, the company reduced its antibiotic use by 50 percent, and it plans to reduce it further.

ì7KHFKDOOHQJHQRZLVWRPDLQWDLQWKHHσRUWDQGNHHSUHGXFLQJDQWLELRWLFOHYHOVúVDLG)HUQDQGR
Villarroel, CEO of Mowi Chile.

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SECTION 02 Chilean Salmon Report

Company listings

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$OOH[SRUWðJXUHVDUHLQ:)(GDWDSURYLGHGE\6DOPRQ&KLOH

*Exports may include companies’ own production and exports from third party producers.

At the time of this report, there are six salmon companies listed on the Santiago Stock Exchange
(SSE) with a market capitalization of CLP 2.67 trillion (€3.6 billion/$4.1 billion) – Empresas
AquaChile, Invermar, Multiexport, Australis, Salmones Camanchaca, and Blumar.

Key executives: Sady Delgado, CEO; Jose Guzman, chairman of the board
Location: Puerto Montt

AquaChile was founded in 2019, formed after the acquisition of Empresas AquaChile by Agrosuper,
parent of salmon farmers Los Fiordos, and Salmones Friosur. The new AquaChile will have some
355 concessions in the country, more than 25 percent of the existing concessions in the country.
The new group is the world’s second largest salmon farming company, and its components have a
long farming history in Chile.

The following companies are now part of the new AquaChile:

Empresas AquaChile
Key executives: Sady Delgado, CEO; Francisco Lepeley, CFO
Sales 2018: $716.2 million
Location: Puerto Montt

Empresas AquaChile, an aquaculture group founded in 1988 with operations in Chile, Costa Rica
and the United States, was acquired by Agrosuper in 2018, and is part of the new AquaChile, the
group comprising all the salmon businesses owned by the giant food conglomerate.

Empresas AquaChile acquired competitor Salmones Magallanes in 2018, adding some 15,000
metric tons of salmon to its annual production. At the time of this report, the company was still
listed as an individual company, although the situation could change as the integration process
ðQDOL]HVDQG(PSUHVDV$TXD&KLOHZLWKDOOLWVDVVHWVLVPHUJHGZLWKVLVWHUFRPSDQ\/RV)LRUGRV
under the new AquaChile. The consolidation process is expected to take around 1 year. Agrosuper

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