Port of Newcastle says container terminal will proceed if secret subsidy to Botany is removed

But in announcing this interest, Port of Newcastle chief executive Craig Carmody signalled that the state government-imposed restrictions on Newcastle competing with Botany for container trade would have to be removed for the project to proceed.

“I can confirm that the Port of Newcastle (PoN) has been approached by a number of globally significant container port operators who are eager to take advantage of our proximity to exporters and importers, the availability of large tracts of low cost land around the port and our access to dedicated freight transport infrastructure,” Mr Carmody said.

“Whilst we cannot go into details yet, these bids clearly demonstrate that there is no doubt in the minds of private investors that a container terminal in the Port of Newcastle is economically viable.

“It’s really a matter of when, not if, we will see preparatory work commencing on the container port in Newcastle.

“It should be noted that, these bids are contingent on the removal of the current artificial constraint imposed on NSW port competition and other regulatory issues.” 

As the Newcastle Herald reported earlier this month, PoN had been hoping that stevedore DP World would build the Mayfield terminal, but their agreement came to an end in July after three years of negotiations.

PoN is half-owned by China Merchants Port Holdings Company Limited (CMPort), which is listed on the Hong Kong stock exchange and controlled by the Chinese state-owned China Merchants Group.

Having grown out of China to be one of the world’s biggest port operators, CMPort would have the financial muscle and practical experience to do the job itself, should it choose to.

It told the Hong Kong exchange on August 6 that it had raised $US1.5 billion ($2 billion) to support its daily operations and to repay loans, noting as highlights of 2018 its purchase of the half share in Newcastle (from another company in the China Merchants Group) and a 90 per cent stake in Paranagua Container Terminal in Brazil.

PoN has refused to say whether CMPort is one of the operators interested in Newcastle, with Mr Carmody saying negotiations were confidential.

“Given the speed with which we have received these bids, I invite interested parties to contact PoN,” Mr Carmody said. “We are seeking bids based on developing a 2-million plus container terminal on the Mayfield site within five years of the artificial NSW Government constraint being removed.

“The development of a modern integrated container port and freight handling facility all on the one site means there would be no double handling of containers before being unpacked at distant locations, far less demand placed on already congested NSW roads and co-mingled passenger rail lines and, of course, significant cost savings for consumers and exporters alike.

Newcastle’s proximity to Sydney has long been cited as a reason against a Mayfield terminal, with critics saying it was too close to Sydney for ships to stop twice, and that shipping companies would not disrupt their schedules.

But PoN points to the success of the Tauranga Container Terminal in competing with the initially larger and nearby operation in Auckland as evidence that its vision can be brought to fruition.

“In the next 20 years, the number of containers moving through ports in NSW is likely to double. Evidence from Deloitte Access Economics and other studies suggests that the development of a highly automated, state of the art container port in Newcastle has the capacity to help ease congestion in Sydney while boosting the competitiveness of the NSW and national economies,” Mr Carmody said.

“While there is much planning and consultation in front of us, it is exciting for both the port and the region that there is such interest and enthusiasm for investing in the future diversification and growth of the Newcastle and Hunter economy.”

Despite this optimism, Mr Carmody acknowledged the difficulty PoN faced if the “secret” container fee agreed to during the 2014 privatisation of Newcastle to protect NSW Ports – the company that bought Botany and Port Kembla from the state government the year before – was not somehow removed or nullified.

The fee effectively doubles Newcastle’s container-handling costs by charging a levy that is paid to the state, which passes the money onto NSW Ports. PoN is hoping the Australian Competition and Consumer Commission will say the fee – exposed by the Herald – is illegal, paving the way for its removal.

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