Motley Fool Australia

Is Tassal Group Limited sailing into trouble?

Credit: Andrea Pokrzywinski

Stocks linked to Tasmanian fish farming could come under pressure on fears that the state government could impose new restrictions on the industry.

Shareholders in Tassal Group Limited (ASX: TGR) and Huon Aquaculture Group Ltd (ASX: HUO) should watch this space closely as the environmental impact of salmon farming looks set to be a hot topic on the island state.

Abalone and oyster farmers are accusing salmon farmers of hurting the industry as effluent and net cleaning waste from salmon farms are coating other marine life with an orange sludge, according to a report by The Australian Broadcasting Corporation.

The independent Tasmanian Marine Farm Planning Review Panel is considering Tassal’s request to merge two salmon farming leases into one.

The new flare-up against salmon farming forced the Tasmanian state government to backflip on a decision to scrap the Marine Farm Planning Review Panel, which will be investigating the complaints.

There is also a senate inquiry into fish farming regulations that will look into waterway health and the economic impact of the industry.

Tassal has refuted these allegations but any new restrictions on the industry will likely impact on Tassal’s and Huon’s operations and expansion plans at a time when both companies are benefiting from growing consumer demand.

Given the track record of Tasmanian state politics, it may be better to wait for more clarity before considering either stock.

Shares in Huon have fallen 4.6% since it listed in late October last year while Tassal is flat over the same period.

If you like you can read Simon Chan’s article with more detail on Tassal and Huon as he compared both businesses in an article yesterday.

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Motley Fool contributor Brendon Lau does not own shares listed in this article . Follow me on Twitter - https://twitter.com/brenlau

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