Giant Northern Territory prawn farming project falls into administration

Project Sea Dragon, which was being developed by Seafarms Group on land leased from AAM Investment Group, has been placed into administration following a construction dispute.

The ambitious Project Sea Dragon, a plan to construct one of the world’s largest integrated land-based prawn farms, will no longer proceed after the developer tipped the scheme into administration.

Aquaculture company Seafarms Group, which is listed on the Australian Securities Exchange, has long held ambitions to develop the scheme to add to its portfolio of existing prawn farms in Queensland. Its first stage would have allowed production of around 6,000 tonnes of tiger prawns each year.

The firm had been developing the project on more than 100,000 hectares of land at Legune Station in the Northern Territory, a property owned by Brisbane-based asset manager AAM Investment Group. The scheme was first conceived in 2012 and was awarded Major Project Status by the federal government in 2015, a status that was renewed in 2019.

AAM acquired Legune in 2018 after Seafarms Group novated its option to purchase the property to AAM, simultaneously signing a 90-year lease for the portion of the property on which it intended to build Project Sea Dragon.

The board of Seafarms Group announced on 14 February that it had placed Project Sea Dragon, a wholly-owned subsidiary, into voluntary administration following a decision made by an adjudicator over a construction dispute.

The firm previously announced on 3 February that the Royal Institution of Chartered Surveyors, as adjudicator, had ruled Seafarms owed contractor Canstruct a total amount of A$13.9 million ($9.7 million; €9.0 million) following the suspension of work on Project Sea Dragon in December 2021 and the subsequent termination of contracts in April 2022.

Seafarms Group CEO Rod Dyer said in a statement to the ASX that the firm had provisioned A$8.7 million to settle the dispute in its 2022 accounts and had the capacity to cover the balance.

He added at the time that the firm was considering its next steps, but its subsequent announcement said it had now withdrawn funding for the project as part of the decision to place it into administration and that it intends to propose a Deed of Company Arrangement to the project’s creditors.

Dyer said: “Seafarms’ other existing operations based in Queensland are separate to Project Sea Dragon and as such these operations are not under administration. As the administration process progresses, we will provide the market with further updates.”

Seafarms Group had obtained all approvals required to build the project during the period that it held the option to buy Legune Station, prior to AAM’s ownership, and the scheme had received backing from both the NT and Western Australia governments.

AAM Investment Group continues to run a large-scale cattle operation on the remainder of Legune Station, which is home to a 35,000 megaliter dam and is located near to the Ord River Irrigation Area.