China’s ‘Krill Project’, which began in October 2010, was intended to enable the country to become, if not the most important, then one of the key players in the South Antarctic krill fishery.
The project was expected to transform the Chinese offshore fishing industry and lead to the growth and development of the marine economy in Liaoning and Shandong provinces. However financial constraints have applied the brakes to this programme.
The Chinese government has trimmed subsidies and it is now largely down to the krill operators themselves to maximize revenues and profitability using the best available technologies in order to compete with Western krill products.
The Krill Project, known as the 863 Project, is part of China’s Antarctic Ocean Living Resources Development strategy. Named ‘Rapid Separation of Antarctic Krill and Key Technology of Deep Processing’, its target is the exploitation and utilisation of South Antarctic krill.
But because of the reduction in subsidies, Chinese companies are under pressure to produce good quality products in large volumes if their krill trawlers are to survive and remain in this business. So far this is not the case.
The companies produce primarily frozen krill and dried meal onboard the catching vessels. The meal is later used on land to extract the oil. However, for the majority of current Chinese krill oil manufacturers, the oil is of a low quality; smelly, viscous and oxidized.
All krill oil is currently manufactured on land from whole frozen krill or dried krill meal, and these two products combined account for more than 95 percent of the krill caught in the South Antarctic.
Even with less than1 percent of the South Antarctic krill production (frozen meats and hydrolysates account for the remainder of production), krill oil is crucial for several fishing operations, contributing in some cases to around 40 percent of their annual revenue.
Recently there has been a renewed demand for krill meal from pet food and aqua feed formulators from both European and South East Asian aqua-feed manufacturers. Chilean-based krill consultancy Tharos estimates that around half of all South Atlantic krill meal production will go to shrimp feeds, while the rest will be used in fish feeds.
Said Tharos CEO Dimitri Sclabos: “Starter aqua-feeds is an area of strong interest bearing in mind krill meal’s special properties. Krill versus fish meal comparisons have been extensively carried out in the past and krill has always come out on top, although these comparisons have been revisited again by feed manufacturers.”
Tharos, which has more than 25 years experience in the South Antarctic krill industry has developed what it describes as revolutionary krill oil at-sea extraction technology.
“The one hundred percent solvent-free oil extraction process is based purely on a physical extraction concept targeting the production of clean marine oils,” Sclabos said. “Its original concept targets the extraction of omega 3s and phospholipids enriched oil which is valuable oil for human health adding a powerful antioxidant in astaxanthin.
“Alongside phospholipids, it also extracts triglycerides enriched oil suitable for food and feed applications, and pigment inclusion in diets. Being solvent free, the technology can work onboard factory trawlers which no other current technology can do.”
Also as he pointed out: “Solvents are extremely flammable and prone to explode, so it is risky to use them.”
Krill meal prices do not necessarily have an insurmountable impact on the resulting krill oil price. Although South Antarctic krill operators target the highest krill meal (and frozen krill) prices, krill meal prices are only one part of the krill oil cost structure.
The price of krill oil is subject to several factors, among them extraction yield, phospholipid content on final product, etc; the raw material cost is responsible for less than 5 percent of the final krill oil cost.
Although krill oil prices have lately been impacted by bad publicity surrounding omega-3s, the average price is still more than USD 110 (EUR 101.5) per kilo in a range starting at USD 90 (EUR 83) per kilo FOB upwards. Low quality, oxidized and blended material leads to lower prices, and it is here that Chinese brands have suffered.
Some Chinese krill oil companies “triple process” to produce their oil. They buy whole frozen krill oil which is converted to dried krill meal on-land, from which oil is finally extracted. “No matter how cost competitive the Chinese are, this ‘triple-process’ is expensive,” said Sclabos, “and worst of all, the final oil quality can be severely compromised, and with it market acceptance and eventually the entire category jeopardized.”
