The company behind a $1.5 billion plan to build the world's largest prawn farm on a remote Northern Territory cattle station will be liquidated following a failed appeal in the Federal Court.
In February, the court found Seafarms subsidiary Project Sea Dragon had been insolvent since at least June 2020 with the judge ordering liquidators be appointed to wind up the company.
Construction company Canstruct brought the action against Project Sea Dragon after its $13.9 million contract was terminated in April 2022.
On Friday, the Federal Court dismissed Project Sea Dragon's appeal against the February judgement and ordered the company to pay Canstruct's legal costs.
For more than a decade, Seafarms has been working to bring to life the prawn farm on Legune Station on the NT/WA border. (ABC Rural: Matt Brann)
The ABC understands a number of local Kimberley companies were sub-contracted by Canstruct to conduct works on the prawn farm and associated workers' accommodation.
Shire of Wyndham East Kimberley president David Menzel did not anticipate money from Project Sea Dragon's liquidation would make it back to local contractors.
"Forgive me if I am a little bit skeptical about how much money is going to get back to local businesses that are owed," he said.
"I guess we will have to wait and see, but I'm pretty sure no-one is holding their breath."
Project Sea Dragon's long-running plans
For more than a decade, Seafarms had been working to bring to life Project Sea Dragon — a 10,000-hectare prawn farm built on Legune Station, one of Australia's most remote cattle properties.
Located on the NT/WA border, north-east of Kununurra, the grow-out facility was supposed to produce 100,000 tonnes of tiger prawns per year.
The project was granted major project status by the NT government in 2015 with the aim of fast-tracking its development and creating 1,600 jobs.
Project Sea Dragon aimed to produce 100,000 tonnes of tiger prawns every year. (Supplied: CSIRO)
A change in Seafarms' chief executive in late 2021 led to a damning review of the entire project, which in March 2022 found it was "not viable in its current form" and involved "unacceptable" risks due to its remoteness, biosecurity threats, and environmental conditions.
Then-CEO Mick McMahon said he was "shocked" at what he found when he came into the business and that the company's plans relied on grow-out ponds that were "unproven in Australia".
Mr McMahon stepped down as CEO in May 2022, following pressure from major shareholder Ian Trahar with his successor Rod Dyer promising to continue with the project's development.
Project Sea Dragon was placed in voluntary administration in February 2023 after the Royal Institution of Chartered Surveyors ordered Seafarms to pay $13.9 million to Canstruct over its contractual dispute.
More than $130 million has been spent by the federal, NT, and WA governments on roads supporting the project. (ABC Kimberley: Courtney Fowler)
Seafarms reported a net loss after tax of $19.6 million for the 2023/24 financial year and sold two of its north Queensland farms for $13.5 million in August.
The NT and WA governments have both spent millions of dollars on supporting infrastructure for Project Sea Dragon.
The federal government contributed $63 million to road infrastructure, the NT government $56 million, and the WA government $15 million.
Looking ahead
Following the Federal Court ruling, shire president David Menzel hoped the negative outcome of the ambitious prawn farm would not discourage further investment in the region.
"I think the value of that road will come over time and it's probably really helped to facilitate some development opportunities in the meantime," he said.
"There's a large parcel of land on the NT side of the border ready to develop into both dryland and irrigated farming operation, so I think we will see some real returns on that investment soon."
Seafarms and Canstruct have been contacted for comment.