"It will position Killybegs and Ireland as a global leader in supply and research around new products and benefits."
It was made possible by Ireland getting a 70pc share of new EU quotas for boarfish, which would amount to 88,000 tonnes in 2014, he said.
KFO chief executive Sean O'Donoghue said Ireland could become a global leader in supply and research of new marine products and bring badly-needed jobs.
"With increasing food ingredient prices and a shortage of quality protein in the market, there is a significant opening in the market for the output which this new venture can deliver," he said.
The Norwegian company has a lot of experience in the marine biotech area and the technical expertise to extract valuable ingredients from marine species including clean fish oil.
Boarfish contains some Omega 3 fish oils, the consumption of which is believed to be beneficial to heart and brain health.
The new facility would also be able to extract ingred- ients from other species, such as blue whiting.