Chinese group wins Port of Darwin

The $365m deal will see Landbridge Group, which is to own an 80% stake, look for an Australian investor to buy the remainder of the facility within the next five years.

The government of Australia’s Northern Territory (NT) has awarded Chinese energy and infrastructure company Landbridge Group (Landbridge) with a 99-year, A$506 million (€327 million; $365 million) contract to operate Port of Darwin.

Under the agreement, Landbridge will take an 80 percent stake in the port and have to find an Australian investor to purchase the remainder within the next five years. The government will retain a 20 percent interest in the port in the interim.

The leased areas include the Darwin Port land and facilities of East Arm Wharf, including the Darwin Marine Supply Base, and Fort Hill Wharf. The NT government will keep ownership of Stokes Hill Wharf, Fisherman’s & Hornibrook’s Wharves and Frances Bay facilities.

“In Landbridge we have a partner that has demonstrated an outstanding track record of investment and innovation that has underpinned remarkable growth, and with it new trade and jobs,” said Adam Giles, Chief Minister of NT. “The proceeds will be used to invest in new economic infrastructure for the benefit for all Territorians.”

“We plan on making considerable financial investment in the Port of Darwin,” added Mike Hughes, Landbridge Infrastructure Australia’s director. “In addition to committing an initial $35 million of new growth investment expenditure over the first 5 years, we anticipate in excess of $200 million of capital expenditure over the next 25 years. Given the scope of development opportunities in the Territory, we hope to invest a lot more.”

The Shandong-based company, controlled by Chinese billionaire Ye Cheng, has business interests in energy, petrochemicals, port logistics, real estate and tourism, and international trading. It has total assets worth more than CNY16.7 billion (€2.4 billion; $2.6 billion) and operates Port of Rizhao, a 30 million ton-per-annum port in Shandong, in between Beijing and Shanghai.

There has been discussions on direct flight services between China and Darwin, according to a local press report. As Landbridge said the port deal will create interest in the NT and Darwin in China, the most likely link is to major cities like Guangzhou or Shanghai.

The deal has also aroused security concerns among Western observers as Darwin plays host to major Navy and multi-national exercises and operations involving around 100 visiting Australian and foreign major warships each year, an unnamed senior Australian defense official told local press.

He added that Darwin is indeed a base for the United States to send reinforcements to disputed waters in the South China Sea, as part of the US strategy to keep Chinese expansion in the region in check.