Nova Austral's nearly million-dollar fine for environmental damage confirmed

Following an appeals court ruling, the Chilean salmon farmer will have to pay the USD 940,350 fine for environmental damage imposed by Chile's Environmental Superintendency.
Court said the Chilean salmon company Nova Austral will finally have to pay the environmental damage fine imposed by Chile's Environmental Superintendency.

Court said the Chilean salmon company Nova Austral will finally have to pay the environmental damage fine imposed by Chile's Environmental Superintendency.

Photo: Nova Austral.

After several judicial comings and goings, finally the Court of Appeals of Valdivia, Chile, ruled that Nova Austral have to pay the USD 940,350 (EUR 866,318) fine imposed by Chile's Environmental Superintendency (SMA) as a consequence of the environmental damage caused by the company by artificially altering the seabed of one of its salmon farms - the CES Aracena 14 - in the city of Punta Arenas, in the Magallanes region, southern Chile.

Thus, the Court accepted the appeal filed by the SMA after a previous ruling by the Third Environmental Court had annulled its resolution imposing such a fine. The penalty imposed on Nova Austral in July 2022 was set at 1,300 Annual Tax Units (UTA), which at that time was equivalent to the aforementioned USD 940,350. Now, in addition to confirming the fine, the Court also ordered the company to pay costs.

That same month, the Environmental Superintendency also decided to revoke three of Nova Austral's farming licenses for overproduction. The SMA took the decision to take the Environmental Qualification Resolutions (RCA) of these sites back, "given the repeated exceeding of the production limits authorized for the company," which, it states, generated environmental damage in the Alberto de Agostini National Park, Magallanes Region.

Nova Austral filed appeals against these rulings, which were accepted by the Third Environmental Court, thus annulling the penalties imposed. However, Chile's Environmental Superintendency filed pleas against the three rulings of the Environmental Court. These appeals are currently being processed in the Supreme Court, which must decide on the legality of both the rulings and the resolutions previously issued by the SMA.

WeAreAquaculture has contacted the company for its assessment of the appeals court ruling, but it has not commented on the decision.

The company, at a delicate financial moment

When the Chilean SMA revoked those three aquaculture licenses to Nova Austral for overproduction, the company said that the historic sanction was unjustified and disproportionate, adding that it did not adequately weigh Nova Austral's economic capacity. The company then spoke of its delicate financial situation and hinted that if the sanction should be enforced, its operational continuity would be in jeopardy.

Then, the salmon farmer's ownership was controlled by Altor Fund III and Bain Capital, but in June 2023, the company requested its reorganization, initiating the process to restructure its liabilities and thus ensure its operational continuity, in addition to the payment of its financial debt.

According to local media La Tercera, at that time Nova Austral's liabilities totaled USD 559 million (EUR 515 million), and the three largest creditors were Nordic Trustee with USD 415 million (EUR 382 million), DNB Bank with USD 69 million (EUR 63 million), and Skretting with USD 23 million (EUR 21 million).

In mid-December of last year, the creditors' meeting rejected the payment proposal put forward by the company, and ending that same month, a new proposal was presented in which the change in control of the company was presented as the key to the sustainability of the business.

Shortly thereafter, in mid-January, Nova Austral announced that ownership was finally being transferred to the main creditors. According to information from La Tercera, 45% of the shares would be transferred to the Creditors Secured by Credit Line and the remaining 55% to the Presidium Creditors. The Chilean salmon farmer was still awaiting the final court decisions on the fine for environmental damage and on the sanctioned farms, still unable to operate.

While awaiting the decision on the latter, the ruling now known as confirming the nearly million-dollar fine for environmental damage only adds more debt to that accumulated by Nova Austral, a company in which some 900 people work directly and employs around two thousand indirectly in the region of Magallanes and Chilean Antarctica, where it has been operating for more than 15 years.

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