Fisheries Minister Darin King said he had turned down the company's request to be allowed to ship much of its redfish and yellowtail flounder quotas to Asian markets unprocessed.
At stake are jobs in onshore plants that prepare and fillet groundfish for sale.
Ocean Choice announced last month the closure of seafood processing plants in Marystown and Port Union, citing financial losses and other factors. More than 400 people lost their jobs.
Ocean Choice says it makes no economic sense to handle species like redfish in onshore plants, when Asian markets often don't want fully processed product.
But King said the province has to ensure it gets a fair share of benefits from the resource.
"This type of exemption would be unprecedented," he told a news conference Friday, adding that market conditions can change and the government must protect the province's long-term interests.
"I have decided this request cannot be entertained."
King said he will make a decision on temporary, possibly multi-year exemptions in coming weeks.
But he said Ocean Choice has been slow to provide information on profit margins and market conditions for redfish that he needs to assess the fairness of any deal.
King also accused the company of using pressure tactics and threatening to land redfish elsewhere after the province refused to extend a processing exemption, first granted in 2008, that expired on Dec. 31.
The minister said he learned earlier this week of Ocean Choice's plans to land redfish from quotas purchased from Nova Scotia.
"We don't appreciate these types of tactics," he said. "Our government is not interested in playing games."
Ocean Choice asked for the yellowtail exemption in exchange for creating 110 full-time jobs at its plant in Fortune, N.L., plus another 150 jobs at sea.
The Fortune plant would process about one-quarter of the company's yellowtail flounder catch, or just over three million kilograms, while the rest would be handled at sea and shipped straight to market.
Blaine Sullivan, chief operating officer for Ocean Choice, told reporters Friday that plans for Fortune are now in doubt.
"We definitely have to regroup and to re-propose to government," he said.
Sullivan said the refusal to extend the redfish quota beyond Dec. 31 was a "punitive" move that cost the company money.
"It's not about politics or provocation," he said of plans to land Nova Scotia redfish. "It's about trying to keep our business running.
"How can people continue to expect us to lose money?"
Sullivan said the province didn't ask for detailed information on redfish until Dec. 21, and that it could take months to provide independently verified documents.
The union representing fish harvesters and plant workers in the province had called on the government to use processing rules as leverage to protect jobs.
Earle McCurdy, head of the Fish, Food and Allied Workers union, praised the minister's response Friday and said the move by Ocean Choice to land Nova Scotia redfish was "too cute by half."
"It confirms very clearly what we'll be facing in a little over four years' time when the current agreement runs out," he said.
Under the terms of a nine-year contract, Ocean Choice is required to land groundfish in the province under minimum processing rules unless it receives exemptions.
The province will have no say over federally controlled quotas once that contract expires in four years — an issue King says he wants to raise with Ottawa.
McCurdy says there's no time to lose.
"As soon as the current nine-year contract between OCI and the provincial government is up ... that will be the end of any onshore jobs from our groundfish stocks on the Grand Banks," he said.
"The benefit from the resources off our shores will effectively be realized by a handful of shareholders in one or two corporations. And, quite frankly, that's not good enough."
McCurdy said a total refusal to offer processing exemptions isn't realistic, but he urged the province to carefully consider even temporary measures.
"You have to look not only at where the market is today, but also be mindful that markets change," he said.
Long-term processing exemptions can eliminate skilled jobs that aren't easily replaced if commercial demands change, he said.