Plans to build one of the world's biggest prawn farms at an outback cattle station in the Northern Territory have been shelved.
Project Sea Dragon at Legune Station, about 340km southwest of Darwin, was set to double Australia's prawn production.
But aquaculture company Seafarms says the 10,000-hectare black tiger prawn pond project was not financially feasible in its current form.
The company said "construction, breeding, processing, operating costs and logistics are all challenged due to distance and remoteness".
"It will not generate acceptable financial return," it said in an investor briefing submitted to the Australian Securities Exchange on Friday.
"The existing scope cannot be completed for targeted costs or achieve target completion dates, and the project currently involves unacceptable risk."
Pond construction has been put on hold until its "unproven" production plan can be tested over the next three years at the station, near the Western Australian border.
Seafarms said significant international markets for the prawns would also need to be developed as supplying the Australian domestic market with fresh, cooked product from the remote location is unlikely to be feasible.
Competing against lower priced suppliers in other countries is also likely to be a problem, given the current construction costs per hectare.
The $1.87 billion project was set to become the biggest aqua-culture project in the Southern Hemisphere, supplying 6000 tonnes of prawns per year.
The company said it "remains committed to delivering on the promise of Project Sea Dragon" but it will need to lower the cost of production.
It will also continue to supply fresh and frozen, cooked, high quality product to domestic customers from its Queensland operations.
"There is strong domestic demand for quality product, supported by pressure on wild caught fisheries and a renewed drive to localise supply chains and replace imports in a post-COVID, higher risk world," Seafarms said.
Australia produces about 5000 tonnes of prawns annually, according to the Australian Prawn Farmers Association.
