Mowi ASA

Report Publication Announcement • Nov 24, 2015

Marine Harvest "Is there any hope for Chile in the next two years"? Havbrukskonferansen 24 November 2015

Perfect storm in Chile

• Rapid growth
• Biological issues
• Antibiotics & reputation
• Lack of smart regulations
• Slow consolidation
• Financing
• Currency

…facilitated by unsustainable levels of antibiotics

MH Chile not immune to biological challenges

Profitability in Chile impacted by both low prices and higher costs (in NOK)

Today's regulations – no real impact

• Approximately 1,300 licenses issued vs ~ 600 licenses being used across production cycles. No limit on biomass
• Regulations on mortality has led to farmers moving to poorer sites for the next generation
• There are many other legal limits to what farmers can do and cannot do, but no real results

After ISA no real change in industry structure

Restricted financing – magic cash?

Chile – any hope the next two years?

Positives

• Tight global salmon supply
• Flat supply from North America
• Industry try to come up with suggestions to regulations

Negatives

• Authorities resist to make real changes in regulations
• Industry acts to slow, and complicates solutions

Opportunities

• Consolidation
• Currency
• Development of value added products
• Reduction in use of antibiotics
• New medicine against SRS and caligus

What does it take to make salmon farming in Chile sustainable?

• 1. Split licences from locations
• 1. Asses total carrying capacity in each region (all species) current level way to high
• 1. Divide carrying capacity on number of licences per region and let companies determine their best locations for farming salmon within each region. Apply x number of licences (MAB's) according to environmental carrying capacity per location
• 1. Monitor environmental impact per location
• 1. Set key biological indicators
• Use of antibiotics
• Number of sea lice treatments
• 1. Set a horizon, for example 10 years, and give the industry players incentive to comply, by rewarding growth
• 5 percent per generation MAB increase on locations that comply with biological indicators
• No growth or reduction of biomass if targets are not reached