Western Cape Business News

Send  Share  RSS  Twitter  19 Aug 2009

VENTURES: There's Abagold In Hermanus


Recent Western Cape Business News

A NEW FORCE in the Cape fishing industry has quietly established itself in the holiday town of Hermanus in the form of perlemoen specialist, Abagold.

While not yet a fishing sector giant, Abagold – which only converted to a public company last year - has carved a lucrative niche in hatching, rearing, processing and exporting of local abalone (or perlemoen).

The abalone rearing industry has come to the fore of late with JSE-listed empowerment group Sekunjalo – which owns Premier Fishing – also making strong inroads into the sector. Prospects for ‘abalone growers’ have also been significantly enhanced by government’s decision to preclude the harvesting of wild abalone.

Abagold, though, has a most interesting history.

The venture started way back in 1984 when a local veterinarian, Pierre Hugo, started researching the techniques and merits of breeding abalone in captivity.

Five years later Hugo was experimenting in the breeding of abalone on the Old Harbour at Hermanus and by 1991 he had set up a pilot hatchery.

By 1993 Hugo had received a permit to cultivate, harvest and sell abalone – which meant the fledgling operation could release 500 000 abalone larvae in the Old Harbour in Hermanus for re-seeding.

Naturally, word of Hugo’s success got around the small town, and in 1995 the venture was incorporated into Hermanus Abalone.

Three years later the Sea View abalone farm with a 60 ton a year capacity was established in the New Harbour in Hermanus, which saw the cultivation of the first abalone pearls.

In 1999 the first 100kg of live farmed abalone was exported to the Far East, and three years later the fast growing business needed to raise R35 million through a public share issue and bank loans to fund the acquisition (and construction) of the Bergsig abalone farm in Hermanus.

Shortly after the first of 1 000 breeding tanks was placed in the Bergsig, Hermanus Abalone changed its name to Abagold (which admittedly sounds like an easier corporate brand to market internationally).

Three years ago Abagold made further inroads into the abalone sector by setting up the Abamax Abalone Farm in the New Harbour in Hermanus in conjunction with an empowerment partner. The company has since become the sole owner of the facility.

The last two years have seen matters develop a-pace at Abagold. The company created its own ‘Pure Gold Abalone’ brand and secured a lease for a 6.3 hectare site in Hermanus in partnership with the Overstrand Municipality and local communities for the development of a community seaweed project

There is not much financial information available on Abagold - presumably because the company is not keen for competitors to gain too much of an insight into the business.

What CBN could gauge, though, was that Abagold is a sizeable business with 230 employees. It is capable of producing more than 220 tonnes of dried abalone, which mostly makes its way to the Far East.

The interesting aspect of Abagold’s business model is that the aquaculture cycle is a near five year process from larvae to plate. Abagold’s product spends four years in the farm before being moved to land tanks, which requires the pumping of 6 million litres of seawater every hour.

From what CBN could garner, Abagold exported a not insubstantial 220 tons of abalone to the Far East in 2008, which generated turnover of almost R60 million.

The company is aiming to breach the 300 ton mark in the next two years – which, of course, may be challenging with the global economic slowdown putting a dampener on international spending on exotic seafoods like abalone and lobster.

It is interesting to note that in 2008 Premier Fishing signalled an intention (after a R40 million investment and the acquisition of Marine Growers in PE) to push production at its abalone aquaculture farm near Gansbaai to 300 tons a year. At that point Premier Fishing believed a 300 ton capacity could yield up to R17 million a year in profits.

For Abagold MD Christo du Plessis, though, the business aims to achieve sustainable wealth through balance. Writing on Abagold’s website, he notes: “Responsible growth is vital, and we intend to do this by building on our established reputation and leveraging off our renowned brand, innovative production systems and well trained team.”

He says over the past 13 years Abagold has built a brand that clients associate with quality and consistency.

Through our experience gained over 20 years in serving the industry and market, we have obtained the knowledge and expertise to become a leader in integrated mariculture and we intend to keep this dominant position.”

CBN, of course, wonders whether at this delicate point in the global (and local) economy a dominant position in the abalone sector can be put beyond doubt through further corporate action.

With a revitalised Sekunjalo pushing Premier Fishing for more growth it might perhaps not be completely a-miss to speculate that a merger between Abagold and Premier’s abalone interests is something that could cross executives’ minds.

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