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Oceana outlines its Hout Bay history

Aug 31 2015 08:45
The Lookout Deck Hout Bay

Hout Bay Harbour.

Company Data

OCEANA GROUP LIMITED [JSE:OCE]

Last traded 62
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Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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OCEANA [JSE:OCE] established the fish meal factory (FMF) in Hout Bay in 1958 after the village was first connected to the national electricity grid. At that time Hout Bay was a small fishing and rural agricultural village, and the majority of the residents relied on the fishing industry to provide employment.

The FMF is located in a proclaimed fishing harbour within the legislated Hout Bay industrial zone.

The factory produces fish meal and fish oil from pelagic fish species (redeye herring and anchovy). These type of fish, which are not suitable for direct human consumption, are listed on the SASSI green list, which means that they are the most sustainable choice, they have well-managed populations and the species is able to handle the current fishing pressure.

The production season runs from January to November (about 330 days) and the factory has the capability to operate 24 hours a day seven days a week. In practice, however, the factory operates intermittently during the season depending on fish availability, location of fishing grounds and variable weather conditions.

In response to the rising levels of stakeholder discontent directed at the odour associated with fish meal production, production at the Hout Bay plant has, over the past three years, been throttled to only 60 days per year.

The production process of fish meal and fish oil

Fishmeal is a protein rich powder, which is produced by cooking, pressing, drying and milling of raw fish. This is done by using steam, which is generated in industrial boilers. Fish oil is produced by separating the oil from the water, which is liberated after the cooking process. Apart from the odour minimisation process, none of these are chemical processes.

The unpleasant odours associated with production

The odour associated with the production of fish meal is unavoidable. It is generated when the fish is cooked in a process similar to domestic pressure cooking and when the fish is dried in a process similar to tumble drying.

All air and vapours released in the production process are contained and treated with the aid of sea water scrubbing, chemical scrubbing and gas incineration. The factory employs the most advanced odour abatement technology of any fishmeal factory in Southern Africa and the best technology available globally.

Over the past 15 years, Oceana has invested in excess of R50m of investment into odour minimisation technology, as well as to improve processing technology and minimise emissions. As required by the National Environmental Management: Air Quality Act, the facility has adopted the best practice for odour abatement management and  is the only fishmeal plant in South Africa to currently be granted a final Atmospheric Emissions Licence (AEL).

The proposed closure of the FMF

No final decision regarding the closure has been made. In accordance with section 189A of the Labour Relations Act 66 of 1995, the company is consulting with employees prior to making a final decision which may affect their current employment conditions.

Reasons for proposed closure

Up until fairly recently, Hout Bay remained a small fishing village with a strong Cape heritage and sense of community that underpinned the industry. Over recent years, the population has now expanded and the town has developed significantly.

Over the past few years residents have lodged complaints regarding the odour, but during the last year the level of complaints escalated quite significantly, despite reduced volumes being processed in Hout Bay. No adverse findings following inspections by authorities have been found and the facility has in all cases been found to be fully compliant with the relevant legislation.

Oceana pointed out that it has invested heavily (R50m) into odour abatement technology, and it is currently the best technology available in the world. In an effort to both to respond to and minimise community complaints, Oceana reduced plant production to 40% of its normal annual production over the past three years.

While this had a significantly negative impact on the financial viability of the business, it did not result in a reduction in the number of complaints received. To the contrary, increased activism saw the level of complaints grow by 240% during the last three years.

This resulted in an increased vigilance by the local authorities with consequent increased audits and inspections. No adverse findings following inspections by authorities have been found and the facility has in all cases been found to be fully compliant with the relevant legislation.

The company now finds itself in the position where it either has to ignore the growing levels of discontent from certain sections of the community and revert to the pre-2012 production levels to become financially viable again, or relocate the plant’s processing capacity.

Should the factory revert to normal production, this would result in an increase from 60 production days per annum to its historical 120 to 180 days per annum. Given the current environment, an increase in processing volumes would escalate complaints from certain sectors of the community still further and it could operations unworkable.

Effect on the staff at the Hout Bay FMF

A total of 98 shore-based staff would be affected if a decision is made to close the facility.

Affected employees and their well being

In the event that the company decides to cease operations at Hout Bay, it will guarantee alternative employment to all 98 affected shore-based employees at its St Helena Bay facility or anywhere else in the group where positions may be available. Oceana will allow suitable time and a relocation grant in order to ease the inconvenience for the staff.

Should they not wish to relocate, retrenchment packages, retraining and reskilling will be offered to affected employees. The company has also set up career planning and interviewing workshops and will provide support with compiling updated curriculum vitae for affected staff. We have also engaged with an employment agency and advisor in Hout Bay to provide help and support for these families to seek alternative employment in the area. Sea-going employees will not be affected.

Odour abatement technology investment

The Hout Bay FMF already employs the most advanced odour abatement technology that is available globally and far surpasses that of any fishmeal factory in southern Africa. Oceana has consulted with leading international experts in the field and has commissioned a number of independent studies into the issue, but the unfortunate reality is that the fish meal production process will always result in unpleasant odours. 

The associated odour, which is only experienced on a minority of production days (60 day maximum) and is largely dependent on the speed and direction of the wind. The majority of the time this odour drifts offshore and goes unnoticed by the residents, but under certain weather conditions there is nothing that can be done stop the odour drifting over Hout Bay.  

Oceana has spent approximately R50m over the last 15 years in odour abatement and has reached the global technological ceiling. We made our first substantive improvements as early as 1972 with another major upgrade in 1985.

As the popularity of Hout Bay grew, so too did the compnay's level of investment in odour abatement, well beyond what the law required. In 1996 it spent R2.5m bringing in the latest odour control methods at that time. Over R9.5m was spent introducing a waste heat evaporator and low temperature dryer, and 2006 required a further investment of R4.7m to introduce the second and third stages to the heat evaporator.

In 2007, another investment of R6m saw two modern decanters installed which also helped mitigate the odour. In 2009 Oceana spent a further R16m in preventative measures. More recently in 2013 and 2014 the factory installed two new burners at a cost of R3.8m. The company's odour control methods exceed the municipal guidelines and environmental regulations by some measure.

As required by the National Environmental Management: Air Quality Act, the facility has adopted the best practice for odour abatement management and  is the only fish meal plant in South Africa to currently be granted a final Atmospheric Emissions Licence.

Engaging with the community

Oceana has tried everything in its power to be a good neighbour to all Hout Bay residents. It has set up a dedicated telephone line for residents to register any complaints; all calls are investigated and logged with the regulating authorities.

There is also a dedicated website, which provides residents with greater detail on our operations and real time updates on any issues that are unfolding at the plant. The company has played open cards with the Hout Bay community and has invited a number of aggrieved residents to tour our facility and familiarise themselves to the various challenges in odour abatement that the factory faces.

Each and every complaint is followed up by the authorities and not a single case of transgression of licensing conditions and environmental regulations has been found.

‘Pollution’

The effluent is completely a natural and harmless byproduct of the production process and is only apparent when the water in the harbour is very still.

Oceana's operation goes well beyond the compliance with legislation that governs safety, noise and specifically, all emissions and effluent that is produced by the facility.

In fact, the entire fish meal operation has been certified under the International Fishmeal and Fish oil Organisation’s “Responsibly Supply” programme. This voluntary independent third party audit and certification programme assures that the vessels, fishing operations and the factories production activities are conducted responsibly.
 
Geography of Hout Bay exacerbates the odour issue

The frequency, intensity and location with which residents may experience odours are largely dependent on the prevailing wind direction and strength.

Prevailing winds mean that March generally is the most problematic month. Although the odour is present every time the factory operates, which is on average 120 to 180 days per year, residents would only experience it on a minority of the production days (60 days maximum) and some often mistakenly assume that there is a process failure at the factory.

Oceana’s investment in the community

The Oceana Foundation has channelled R2.4 into corporate social investment projects in Hout Bay over the past three years.

Often repeated misconceptions regarding the Hout Bay FMF:

• Oceana does not process "rancid" fish and nor are its employees exposed to rancid fish.
• Oceana does not leave fish unprocessed for extended periods. 24 hours is the maximum allowed by its Environmental Management Plan.  
• Oceana has an engineer and a full maintenance team on site, which together with specialist contractors, conduct regular maintenance on its plant. Nearly R8m is spent on maintenance per annum.
• Industrial fish used for processing into fish meal is not preserved on ice before landing to fish meal processing factories. Oceana’s Environmental Management Plan makes provision for the fact that fish is not preserved on ice and effectively manages maximum daily intake volumes accordingly. The company has installed a chilled storage facility for raw fish. This was an industry first in South Africa.
• Oceana does not bring fish in for processing from East London or anywhere from the eastern or southern Cape.
• Oceana did not object to the construction of a boat building factory. The company did however, object to a residential development going up right next door to its facility, which the City Council upheld.

* This opinion piece was first published as a FAQ - Proposed closure of Hout Bay Fishmeal Facility (FMF) by Oceana.


oceana  |  hout bay  |  fishing industry
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