Port of Darwin leased for $506m on 99 year lease

Adam Giles, the Chief Minister of Northern Territory, has announced a $506m, 99-year lease for the port signed today with the Landbridge Group.

That price represents approximately 25 times expected earnings before interest, tax, depreciation and amortisation in 2016, and represents a surplus to book value, according to an official statement.

 

Darwin Port land and facilities of East Arm Wharf (including the Darwin Marine Supply Base) and Fort Hill Wharf will be leased.

The Territory will retain Stokes Hill Wharf, Fisherman’s & Hornibrook’s Wharves and Frances Bay facilities.

It will also retain a range of oversight and regulatory functions including the Regional Harbourmaster role and (through the independent Utilities Commission) responsibility for price and access regulation.

“Although the upfront cash proceeds are compelling, reflecting the strong interest in the Port from potential investors, my Government has always said that this transaction is about growing the Port and the economy. The proceeds will be used to invest in new economic infrastructure for the benefit for all Territorians.

“The lease process has delivered on many levels and we have ensured that employees, port users and the Government’s interests are well protected. This is a fantastic outcome for the Territory.”

Landbridge has confirmed its intent to maintain the established workforce at the Port of Darwin and that there will be no forced redundancies during the term of the current Enterprise Agreement (which terminates in June 2018), according to an official statement.

It is also reported that Landbridge also intends to “implement a stable and competitive pricing regime for Port services with no more than CPI indexed pricing adjustments”.

Landbridge Group is a privately owned Chinese group that operates a 30 million tonne per annum port in North Haizhou Bay in Shandong province, strategically located between Beijing and Shanghai.

Landbridge Infrastructure Australia’s Director, Mr Mike Hughes, said: “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.

“We plan on making considerable financial investment in the Port of Darwin. 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.”

Mr Hughes said that Landbridge's first project will be in keeping with its focus on promoting volume growth at the Port and will immediately commence design and preparatory works to increase reefer container capacity.

“There needs to be adequate protection for users of the port and we await for further details of the transaction,” said Chris Schultz of ANL.

 

 

 

 

 

 

 

 

 

   

 

 

   

   

 

 

 

 

 

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