Chinese group snaps up Darwin port

14 Oct, 2015 04:05 AM
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Nearly half of the total cargo that passed through the port in 2014-15 was traded with China

CHINESE energy and infrastructure group Landbridge will consider opportunities to build hotels in the Northern Territory after paying $506 million for a 99-year lease for the Port of Darwin.

As flagged by The Australian Financial Review'sStreet Talk column, the privately held Chinese company - which has a real estate arm that develops hotels - beat local and international consortiums to operate the port after it was privatised by the Northern Territory government.

Landbridge will invest $200 million in the port over the next 25 years to boost trade and tourism links with Asia, including improving cruise ship facilities. The port is an emerging destination for cruise ships, with 65 cruise ship visits in 2014-15, the highest number in six years.

"Landbridge intends to grow two-way trade between Australia and Asia, leveraging Landbridge's existing port and logistics businesses and firmly putting Darwin on the map for Chinese business," said Landbridge Infrastructure Australia's director, Mike Hughes.

The Chinese group is also understood to be keen on building new hotels in the city. The Northern Territory government is considering a luxury hotel development in Darwin.

Northern Territory chief minister Adam Giles said the Territory would benefit from Landbridge's "position, networks and experience" in Asia.

Nearly half the 3.4 million tonnes of total cargo that passed through the Port of Darwin in 2014-15 was traded with China, mostly bulk mineral exports.

ChAFTA to boost trade

Trade to China is expected to receive a further boost when the China-Australia Free Trade Agreement comes into effect.

Federal Trade and Investment Minister Andrew Robb said Landbridge's investment in the port would be "a huge spur" to the development of Australia's north and encourage additional investment in agriculture, resources and energy and infrastructure.

Landbridge is initially planning to develop warehousing for refrigerated products at the port to expand boxed meat exports. The Australian Agricultural Company started operating a new abattoir near Darwin in October to supply beef to the US and Asia.

Singapore is the Port of Darwin's second-biggest trading partner.

Cargo movements through the port dropped 40 per cent in 2014-15 compared with a year earlier, mostly due to a fall in iron ore exports, but live cattle exports rose 51 per cent to a record 613,473 head of cattle.

Landbridge owns a port at North Haizhou Bay in Shandong province, south of Beijing and is currently expanding the port's capacity to more than 200 million tonnes annually. It also owns a Brisbane-based coal seam gas producer, WestSide Corporation.

The Northern Territory government will retain an initial 20 per cent stake in the port and Landbridge will look for an Australian investment group or company to acquire the stake within the next two years.

But Northern Territory taxpayers will benefit from expected increases in trade flows through the port in the future due to an agreement with Landbridge that allows it to take a percentage of the port's revenues above a certain level, which has not been disclosed.

Landbridge paid a multiple of 25 times the port's 2016 estimated earnings before interest, taxation, depreciation and amortisation to secure the sale. Similar earnings multiples were paid by infrastructure investment group Hastings Funds Management and Chinese conglomerate for New South Wales' Port of Newcastle last year, and by Industry Funds Management, Australian Super and the Abu Dhabi Investment Authority when they acquired the Port of Botany in 2013.

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READER COMMENTS

Jock Munro
14/10/2015 7:47:03 AM

And more of Australia goes offshore. It would be a surprise if the new Chinese owners of Darwin's port were not connected to their communist rulers.
Chick Olsson
14/10/2015 9:35:37 AM

How is it that foreigners can own vital port facilities??
mouse
15/10/2015 12:26:22 PM

Because Chick, they have the money and the Territory does not.
Chick Olsson
15/10/2015 2:51:16 PM

NT doesn't have plenty of money?? Thats no reason to sell out port facilities to overseas interests.
angry australian
15/10/2015 2:58:31 PM

Chick our governments aren't too concerned about who owns our ports. i'm not sure there are too many left in public hands anyway. Portland from memory is owned by the Kiwis, many others are owned by state funds in Dubai & Singapore. At the end of the day they can't take them home and most governments have been careful to institute laws to protect local exporters.Although it must be said that the present vic govt is a worry over the Port of Melbourne sale
Jock Munro
15/10/2015 3:48:14 PM

They (The Territory) owned the Port mouse and they chose to hock it. What in the hell are you on about?
Topendtraveller
12/11/2015 11:13:39 PM

The Port of Darwin has lost Millions and cost Tax Payers a huge amount of money over the past few years. Why? Because for the past few years it has been run by a bunch of incompetent people, some shielded by the CLP because of party connections. Individuals who have worked hard and developed the port over the years have left for senior positions elsewhere, and have been replaced by mates of the clowns who have brought the downfall of the Port which once made money. I'm sure the new Chinese owners will soon rectify this & get rid of the lot .
Jock Munro
13/11/2015 11:13:51 AM

We now read that the Chinese company that has leased the Port of Darwin has strong links to the communist Chinese government and it's military. Should anyone be surprised?

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