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New Agreements with OCI Revitalise Fortune Fish Plant Operation

27 December 2012

CANADA - The Provincial Government has finalised agreements with Ocean Choice International Limited (OCI) that will ensure the continued operation of the Fortune fish plant and secure over 110 processing jobs in that community. Upon execution of the agreement, the fish plant will re-open in January to process cod, and yellowtail flounder processing will commence within six months.

The announcement was made by Derrick Dalley, Minister of Fisheries and Aquaculture. Minister Dalley was joined by Darin King, Minister of Justice and MHA for Grand Bank, Martin Sullivan and Blaine Sullivan of OCI, and the Mayor of Fortune, Charles Penwell.

“We are pleased that after months of intense negotiation, a deal to keep the Fortune fish plant open, which will employ 110 people in processing and result in jobs offshore, has been reached,” said Minister Dalley. “Our government sought to achieve an agreement that represents the best possible outcome for Newfoundlanders and Labradorians. We are forging a new partnership here today that, as is the case in all successful partnerships, each party needs the other. I thank OCI, the workers at the Fortune fish plant, and the community of Fortune for their hard work and dedication in ensuring a future for this fish plant.”

The yellowtail flounder agreement provides a framework for maximizing the use of OCI’s yellowtail flounder quota. A minimum of 25 per cent of all yellowtail flounder landings will be processed in Fortune. A separate agreement has been reached on redfish.

The redfish agreement provides a framework for the maximum utilization of OCI’s redfish quotas. To achieve this goal, a 100 per cent exemption to provincial Minimum Processing Requirements for the export of redfish will be provided. Redfish in particular is not economical to process in the province. A number of processing companies have been granted exemptions to export redfish in whole form in recent years.

Highlights of other requirements of OCI under the agreements include:

  • A minimum investment of $1 million in capital improvements at the Fortune fish plant within six months of the execution of the agreement;
  • A minimum of 110 full time processing positions for a minimum of five years;
  • Access to unused yellowtail quota to other licensed harvesters and processors throughout the province;
  • Opportunity for other provincial processors to purchase by-catch at competitive prices;
  • A top-up of $2.50 per hour to a maximum of 560 hours to the Fish Plant Worker Employment Support Program for each qualifying worker displaced by the closure of OCI facilities at Marystown and Port Union; and,
  • The company has committed to using a Canadian crew for harvesting of quota under this agreement, subject to availability and to the satisfaction of the Minister of Fisheries and Aquaculture.

As part of the agreements, OCI will initially charter an additional vessel (over and above the two groundfish vessels it currently operates) for harvesting of redfish and yellowtail flounder, with a goal to purchase a new vessel within a year. In the case of redfish, the company would, upon the purchase of a vessel for the identified fisheries herein, be granted a redfish exemption for the debt amortization period, expected to be 10-15 years. In addition, OCI must live up to their commitment to Fortune for five years as a condition of the redfish exemption. In the case of yellowtail flounder, the exemption to export up to 75 per cent of the yellowtail flounder harvested will only remain in place as long as OCI’s obligations to Fortune are honoured. However, this exemption will be reviewed by the Minister of Fisheries and Aquaculture at the end of 15 years to determine its continued necessity. More information in respect to the exemptions and the conditions surrounding them is provided in the backgrounder below.

“The Burin Peninsula has had a long-standing connection to the groundfish industry in this province,” said Darin King, Minister of Justice and MHA for Grand Bank. “People are the most important aspect of these agreements, and I am thoroughly pleased to see 236 jobs secured today. The agreements have been a long time coming; however, based on what we see today, a significant amount of work was required to meet the needs of all involved and to find a solution that is balanced and appropriate for all stakeholders. This is certainly a great day for the Burin Peninsula and the province, and I am glad I have been a part of it.”

The total Gross Domestic Product impact of OCI’s commitment to the provincial economy is estimated between $30 -$35 million annually and will result in 236 jobs, with direct labour income projected at $14 million annually.

“Today marks a positive step in securing the future of flatfish and groundfish production in Newfoundland and Labrador,” said Martin Sullivan, Chief Executive Officer of Ocean Choice International. “Our family has been part of the fishery for over a century, and we want to keep our business here at home. This agreement is extensive and all encompassing, and we believe is in the best interest of all those involved, including our company. We sincerely look forward to working with the Provincial Government, our employees and the people of Fortune to make this arrangement work for the long-term. Our commitment has never been stronger, and we commit to working tirelessly to make this business work. We acknowledge the Provincial Government for their due diligence in structuring this deal and ensuring the best possible economic benefit from our fishery for the people of Newfoundland and Labrador.”

The yellowtail flounder and redfish resource will be harvested for the benefit of the province, communities, and people who rely on OCI for their livelihood – harvesters, plant workers, and supply and service workers. Exemptions for both species have been permitted under Provincial Government regulations on many occasions in previous years.

“Given the economic difficulties OCI has experienced with processing yellowtail flounder and the associated market challenges, which were confirmed by Deloitte last year, the province is confident it has negotiated the best possible agreement that optimizes the value of the yellowtail resource for the benefit of the province,” said Minister Dalley. “We had always maintained the position that any agreement by government to relax the province’s minimum processing requirements would need to take into consideration OCI’s level of commitment in relation to employment and production, and would have to respect a Newfoundland and Labrador-first policy for the raw materials harvested. The agreement provides provincial harvesters and processors the first option to attain unutilized resource and thus offers further opportunities for employment and economic benefits as a result.”

The legal agreements between the Provincial Government and OCI will not be released publicly to respect the business interests of the company. However, details of the agreements and further information on yellowtail flounder and other groundfish is provided in the backgrounder below.

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