Scarce, high priced and in high demand, there’s no doubting the world’s most valuable shellfish, abalone, is big business in China.
Abalone is one of several aquatic species China holds in high regard, known in ancient times as the ‘elixir of life’.
In Mandarin Chinese, the word for abalone is ‘Bao Yu’, which sounds strikingly like the Chinese phrase for ‘guaranteed wealth’, a coincidence which has created a mythology that good fortune will come to those who consume it, particularly around the festival times of Lunar New Year and Golden Week.
Traditionally, abalone was caught wild from open ocean fisheries, contributing to its scarcity as it can take between three and eight years for the mollusc to reach eating size, depending on the species.
As demand has increased commensurate with the wealth of China’s burgeoning middle class, production of abalone has become industrialised, shifting inland to farming.
China produces around 140,000 tonnes of farmed abalone each year, fetching an average price of around $US20 per kilogram, according to data presented at the International Abalone Symposium held in Xiamen, Fujian Province, in May.
The next highest abalone farming country is South Korea, which produces around 16,000 tonnes of the molluscs annually.
Wild-catch abalone fetched a much higher price, around double that of farmed production, Ocean Grown Abalone managing director Brad Adams told Australia China Business Review.
Wild production, Mr Adams said, achieved average prices of around $US40/kg in 2017-18.
“Global demand for abalone remains high and is on the rise, particularly for the wild-harvested product,” Mr Adams said.
“The wild-catch product fetches the highest price, however, in recent years supply has been in decline in many countries due to sustainability factors and other environmental impacts affecting the wild-catch abalone supply.”
In contrast to China, Australia is a clear leader in wild-catch abalone production, at 2,400 tonnes per year.
The only other countries with significant wild production are Japan, at 1,300 tonnes, and New Zealand, which produces around 700 tonnes annually.
But with strict limits on what can be caught in wild fisheries, production is ultimately capped in the name of sustainability.
To dive into demand for wild product, Australian Securities Exchange-listed Ocean Grown Abalone has developed what it calls abalone ranching – controlled open ocean facilities that replicate wild growing conditions.
“We are producing a wild product, it’s seen by the market as wild and we market it as baby greenlip abalone from the wild oceans of Augusta,” Mr Adams said.
“And we get good prices because of that, our products have actually won a number of awards, because it is a very good, consistent product.
“It’s all the same age, it’s young, it’s grown in a healthy environment and it’s seen as a very high-quality abalone product.”
Mr Adams, a former commercial abalone diver, said it took several years to develop Ocean Grown Abalone’s process, exploring different systems from wild culture to inland growing.
But it was the ocean that Mr Adams said provided the most potential.
“We found that there are a lot of areas out there where everything is right on the seabed, but it was just missing the habitat, the rocks that they grow on,” he said.
“So we started running trials by putting some concrete out in some areas of opportunity, and we found that we got juvenile abalone on those rocks.
“Then we decided to put some more science around it, and we ran a comprehensive, well-funded 12-month research project with a number of different environmental scenarios such as stock density, block shape, location, to assess growth rates and survival rates.”
The research resulted in the creation of Ocean Grown Abalone’s concrete ‘abitats’, purpose-built artificial reef structures designed specifically to encourage greenlip abalone growth.
In 2014, Mr Adams said Ocean Grown Abalone got its first lease – 413 hectares in Flinders Bay, near Augusta in the South West of Western Australia.
Ocean Grown Abalone has around 10,000 concrete abitats in the water at Flinders Bay, with each of the concrete blocks having the potential to produce around 20kg of abalone per year.
In three to four years, Mr Adams said the company expected to hit its target production of around 200 tonnes per year.
Ocean Grown Abalone, which exports more than 90 per cent of its catch to China, is in the process of expanding its Flinders Bay abalone ranch to include a processing facility and ‘cellar door’ operation at Augusta Marina.
That facility, Mr Adams said, should allow for Ocean Grown Abalone to achieve an even higher premium for its abalone by providing live product for export, initially to its partners in Hong Kong, while distribution to Shenzhen and other Chinese cities was also being examined.
“You can get a lot higher price for live abalone, you’re looking at a $US15 to $US20 premium per kilo if you go live,” he said.
“We’ve got a significant advantage over other states in that we can get our product landed in Hong Kong within eight hours, so that’s a significant advantage in getting abalone delivered live from a tank here to a tank in Hong Kong or Guangzhou, or Beijing or wherever we decide to get the product into.”
Ocean Grown Abalone is also licensing its patented process to a joint venture partner in Esperance, on WA’s south coast, with 400 seeded abitats in the water.
Similar operations in Victoria’s Flinders Aquaculture Zone and in Cape Jaffa, Wardang Island and Elliston in South Australia are being assessed to determine if the areas are suitable.
“We have a number of other states looking at what we are doing, and even other commercial abalone people looking at stock enhancements in their own industries, based on what we are doing, because we are just putting abalone back into the wild and letting nature take care of it,” Mr Adams said.
“You just look for areas where there is lots of seaweed flowing past, some decent swell, and the abalone just sit on these abitats waiting for the food to come to them.”
However, a recent research project in Port Lincoln, South Australia, found that despite waters considered to have good potential for a commercial greenlip abalone fishery, trials of juveline abalone seeded in the area had not been successful due to predators not present at sites in WA, including Spider Crabs and Eleven Arm Starfish.
Mr Adams said infrastructure was another important consideration when assessing the viability of a potential commercial abalone operation.
“In Augusta we’re in a sheltered bay, so we can work there 200 days a year diving at least, there is a marina that the state government built right next to our ranch, which is only a five-minute boat ride from the marina,” he said.
“That’s allowed us to put lots of concrete out there quickly, and of course we are close to a town, being Augusta.
“There’s lots of areas in the wild where abalone ranching would work well, but if you’re any more than seven or eight nautical miles away from infrastructure then it would be very difficult to build the ranch and then to service, operate and harvest the ranch.
“But it’s a very slow-burn business, you first have to scout sites, you have to test them to ensure that the abalone will grow there, then you need to purchase juveniles from a hatchery, you’re looking at six to seven years to get a full-blown ranch up and running, it’s not something that happens overnight.
“But we do have the first-mover advantage to select the best areas in Australia, wherever they might be, and there is more expansion potential here in Augusta as well.”