Investment key for pearl trade

THERE are no certainties in the pearling industry which, like so many primary industries, relies on environmental conditions to deliver a quality harvest.

The unpredictable nature of pearling is, however, driving a push for new pearl oyster farm leases to make the industry more attractive to much-needed investment..

The launch of Shark Bay pearl operation Cape Inscription Pearls’ first commercial harvest last week highlighted the need for long-term leases to ensure capital investment in this industry.

Cape Inscription Pearls director Malcolm McGowan is convinced a change from licences to leases will give pearl farms the opportunity to borrow against the leases and finance what is a labour and capital intensive industry.

“We’re creating a brand new industry at the moment … and the banks need to have their eyes open. Let’s make these leases so we can borrow against them,” Mr McGowan said.

Australian black pearls are poised to snatch a share of the market currently dominated by the Tahitian black pearl industry.

Fisheries WA estimates suggest the black pearling industry in WA will grow rapidly to be worth $50 million a year.

The real challenge for industry players like Cape Inscription Pearls is not so much the volatile market for the end product as the fight to get potential investors and the government to recognise innovation and support this new industry.

The Maxima Pearl industry in WA’s north did not offer big returns until the 1980s, many decades after it was commercially established and when major changes were made to the industry’s operation.

It has taken the McGowan family four years and millions of dollars to get to the point where they can launch their first commercial harvest.

The problems with the licences granted by Fisheries WA is they authorise certain activities in an area for the licence holder rather than giving the holder rights to an area of land or water.

The licences are renewable on a yearly basis, which tends to discourage investors who want to invest their money in a long-term venture rather than something that could be halted if a licence is not granted.

And although this is very rarely the case it has been a stumbling block for many industry members seeking investment.

The Maxima pearls are bound by the Pearling Act but, because black pearls are a new industry, they are under the jurisdiction of the Fisheries Act. There also is some pressure to align the industries under a single act.

There are also Native Title pressures in this world heritage class reserve.

Agriculture Minister Kim Chance is aware of the pressure to look at a longer term tenure arrangements for black pearl farmers.

“It’s very clear the industry view is for some tenure arrangement,” Mr Chance said.

However, the arrangement that is finally agreed to must provide a satisfactory guarantee to lenders if the industry is to push ahead and really compete with the Tahitian black pearl industry.

For the McGowan family and Cape Inscription Pearls, a lease would take some of the hard work out of convincing investors (or even the banks) to put money into the business.

But the family is well aware of the risks, especially as their side-step into pearling was the result of a frustrated attempt to diversify into farming tuna.

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