Chinese Invest in Australian Port

Port of Darwin

Published Oct 13, 2015 6:09 PM by The Maritime Executive

China’s Landbridge Group purchased a 99-year lease in the Port of Darwin in north Australia for $370 million as the country seeks to capitalize on rising Chinese demand for imported food and overseas travel.

Landbridge, a privately-owned Chinese energy and infrastructure company, is expected to significantly upgrade the port’s cargo and cruise terminals. Landbridge is reportedly investing over $200 million in growth projects which include container handling and refrigerated storage for beef exports over the next 25 years.

Under the terms of the agreement, Landbridge will take over operations of Darwin Port as well as the facilities of East Arm Wharf, the Darwin Military Supply Base and Fort Hill Wharf. Landbridge aims to increase two-way trade between Australia and Asia by using its existing port and logistics businesses in Asia.

Landbridge reportedly paid the full price for the lease but has only taken an 80 percent stake in Darwin Port. Landbridge will be required to find an Australian investor to purchase the remaining 20 percent within five years. The Australian government will hold the remaining 20 percent stake until an investor is found.

Darwin is the latest in a string of ports sold by cash-strapped state and territory governments as they seek funds for infrastructure.

In April 2014, the China Merchants Group partnered with Australia-based Hastings Fund Management to secure a 98-year of Australia’s Newcastle Port, which is the world’s largest coal export terminal.

Australia's state governments, once hesitant to give up tax revenue by selling infrastructure, have had a change of heart since New South Wales sold its desalination plant for $2.3 billion in 2012.

In early 2014, the federal government said it would pay states to sell assets as treasurers across jurisdictions try to lure local and international investment.