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INTERVIEW-Russian fish farm group to scale up as business rebounds

MOSCOW, July 26 (Reuters) - Russian fish farming company Russian Aquaculture plans to invest in more production capacity, encouraged by last year's return to profit and a nascent recovery in consumption, Chief Executive Ilya Sosnov told Reuters.

The company, which farms salmon and trout in the Barents Sea and in the northern Karelia region, made a loss in 2015 after it was hit by fish disease. But it is now belatedly set to benefit from an import ban in 2014 on Norwegian fish.

"Red fish is of course a luxury product, but consumers can currently afford to spend more. They are probably tired of economizing," Sosnov said in an interview, referring to signs of a pick up in the Russian economy from a recession.

After writing down around 1 billion roubles ($17 million), Russian Aquaculture, the country's largest commercial fish farmer, returned to profit in 2016.

On Wednesday, the company - whose main shareholder is Maxim Vorobyov, brother of the Moscow region's governor - reported a more than nine-fold increase in first half 2017 revenue to 3.3 billion roubles, and 1.5 billion roubles in earnings before interest, taxes, depreciation and amortization.

"We have overcome biological problems and ... have a task of considerably increasing the size of the business," Sosnov said.

That means eventually deploying hatchlings to seven or eight farms compared with three farms this year, he added. Over five to ten years, the company aims to produce 25,000-30,000 tonnes of fish, compared with 8,400 tonnes in the first half of 2017.

Russian Aquaculture's shareholders approved the issue of around 33 million new shares in April, which could raise up to $50 million to help finance its investment program, Sosnov said. He gave no timeframe for the sale.

He said the company was in talks to acquire two or three fish farming cages from Norwegian producers, each worth around 300 million roubles. The investment program also envisages expanding the company's fleet.

The company's recent acquisition of a smolt plant in Norway was a move to secure the quality of planting stock and reduce the risk of diseases, he added.

The company does not rule out building its own feed production plant either, probably by becoming a shareholder in a joint venture, and may branch into fish processing, Sosnov said.

($1 = 59.8570 roubles) (Reporting by Maria Kiselyova and Olga Popova; Editing by Katya Golubkova and Mark Potter)