The market for fish is insatiable – but that’s cold comfort for fish farmer André Bok as he struggles to keep afloat Pure Ocean East London, the fish farm in the Industrial Development Zone.
The business has been operating in a pre-feasibility phase for three years and requires financial input for some considerable time as it overcomes the technical challenges of growing its dusky cob to a marketable size.
But its owner, JSE-listed BK One, has hit the wall, with trade in its shares suspended when the price dropped to 10c a share late last year.
Pure Ocean East London (POEL), part of Pure Ocean Aquaculture (POA), has spent R55-million in developing infrastructure and operating costs, but the company’s investment value has been reduced to nil.
BK One, which has seen its worth plunge from R240-million to R2.4-million, reported in late December that its subsidiary investments, including Pure Ocean, were unlikely to deliver any value.
A private equity investment firm formed by Basileus Capital and Kwanda Capital Investments, BK One listed on the JSE in 2011 but has been the subject of intense scrutiny by business writers.
In 2012 Basileus co-founder Julian Williams was shot dead by former business partner and alleged R2.2-billion Ponzi scheme mastermind Herman Pretorius, who then turned the gun on himself.
POEL chief executive Bok was scheduled to meet with potential investors this week to discuss a buyout of the local fish farm, which will likely happen at a bargain basement price, given BK One’s troubles. Its chief executive Anton Keet did not respond to e-mails and messages left on his phone.
Marine biologist Bok has been with Pure Ocean for seven years, initially modelling the business plan, then overseeing the construction of infrastructure and now nurturing the growth in the fish.
The business, which employs four workers, already supplies juvenile dusky cob to other fish farms around the country and Bok is confident that within 18 months, they will be producing fish to market size.
There have been tough challenges to overcome in what is a new industry, including stabilising environmental conditions and optimising feeding, growth rates and stock density.
While he acknowledges the business hasn’t yet achieved what it set out to do, he says emphatically: “I wouldn’t be here if I didn’t believe in the industry. We’ve had technical challenges but we’ve also had enough successes to take us forward.”
Bok says fish farming is the only sustainable alternative to rapidly dwindling natural resources. “The market is crying for fish, both locally and for export.”
Aquaculture battling due to limited support
The Eastern Cape government has made the development of aquaculture, including fish farming, a key part of its economic strategy to address poverty and unemployment.
But BK One, owner of Pure Ocean East London (POEL), has blamed the “complete lack of governmental support” for working capital shortfalls on its dusky cob fish farm in the Industrial Development Zone.
POEL chief executive André Bok, however, says the problem was rooted in the challenges of “developing a new industry in a new environment with a new species”.
Bok said this week that the ELIDZ had done “a fantastic job” in accommodating and facilitating the investment in aquaculture.
He said funding of the sector was a problem for all participants, given the challenges of stabilising production within timeframes that satisfied investors. Government was supportive but, understandably, had to be circumspect in the extent to which it backed individual investments.
Rather than being fully operational to serve the market directly, Pure Ocean currently supplies juvenile dusky cob to other fish farms, due to both the need to improve cashflow and the difficulties of growing its fish to marketable lengths.
The ELIDZ said it believed Pure Ocean had “great potential. They have succeeded in proving the technical viability of the operation”.
The national Department of Trade and Industry administers an aquaculture incentive scheme and the ELIDZ said it had played a role in lobbying for a more supportive environment to develop the sector.
“We have also linked the company to potential private investors and positive outcomes are yet to materialise,” the IDZ said. — firstname.lastname@example.org