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Rapid expansion of SeaDragon Marine Oils

09 Jul, 2013

Following a $2.5 million boost from an Australian investor in October 2012, Nelson-based SeaDragon Marine Oils is undergoing rapid expansion to increase its production capacity to enter the global market for omega-3 products.

Omega-3 oils

The company has also commissioned a new $3.5 million fish oils plant, scheduled to be operational in 2014.

A recent report by Edison Investment Research says the new plant should treble capacity and allow SeaDragon to diversify from squalene (shark liver oil) to omega-3 oils and eventually from mainly dietary supplement end-markets towards branded B2C (business-to-consumer) and pharmaceutical markets.

Competition for raw materials

The report says that, while SeaDragon’s order books are full, problems for the company actually came in the form of competition for raw materials rather than for customers, at times leaving the company unable to fulfil demand from existing clients. The NZ$2.5m cash injection from Australia’s Bioscience Managers “made all the difference to its ability to source raw materials, and we expect revenue for the 5.5 months to March 2013 to be NZ$9.3m, helped by two large orders towards the year end”.

However, Edison cautions that raw material prices remain a “key sensitivity”.

In an interview with the Nelson Mail, SeaDragon Chief Executive Officer Ross Keeley said, “If you look at the Australasian market, that’s not just Australasian consumption but production within this market, it is in excess of 7500 tonnes.

“We have been in a holding pattern with respect to the development of the omega-3 fish oil, New Zealand-sourced fish oil, until such time as this plant is fully commissioned, which we are hoping will be late in 2013.”

SeaDragon hopes to initially capture 15% of the market. “We’re taking a fairly cautious approach and negotiating with our existing customer base and looking to gradually move more and more of our product into their purchasing strategies.”

Markets for fish oils

According to the company’s website, SeaDragon’s products are currently sold on every continent with the exception of South America and its raw materials are sourced mainly from fish caught around New Zealand, the Pacific and Indian Ocean. “While opportunities exist to sell to other countries, current demand from existing customers will need to be satisfied first, although numerous enquiries have been received from Eastern Europe suggesting strong prospects for sale in the near future,” says the website.

Several studies have shown that fish oils in different forms can have a measurable therapeutic effect on skin, brain, heart and joint health.

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