Australia’s Port Kembla up for sale

The deal may net the New South Wales government up to A$500m for the regional port. Port Kembla might be added to the potential 99-year lease of Port Botany, one of Australia’s busiest trade hubs.

At yesterday’s budget announcement, New South Wales Treasurer Mike Baird announced the potential lease of Port Kembla, a regional port, in a deal that could net the government around A$500 million (€397 million; $498 million), according to media sources.

“As a regional port, Port Kembla has significant growth potential that we believe can be more appropriately managed and financed by the private sector,” Baird said in a statement.

The idea to lease Port Kembla came on the back of a scoping study being conducted by Morgan Stanley on a potential 99-year lease of Port Botany, one of Australia’s largest trading hubs, in a deal valued at up to A$2.2 billion.

Baird said in his statement that “the advisors [on Port Botany] highlighted the significant value that Port Kembla could bring to the transaction, prompting the government to undertake additional scoping work to review its potential inclusion in the Port Botany transaction”. He added “the additional scoping work on Port Kembla would not delay the Port Botany transaction process”.

The Treasurer explained that funds earned from the upcoming port leases – as well as the $2.3 billion the state recently received from the 50-year lease of the Sydney Desalination Plan to Canada’s Ontario Teachers’ Pension Plan and Australian fund manager Hastings Funds Management – will be used to fund local infrastructure projects.

At the close of last year, the New South Wales government selected Morgan Stanley to perform a study on the potential lease of Port Botany and gauge investor appetite for it. The government is expected to decide on the study recommendations by the second half of this year with a view to completing the deal by mid-2013.