THE Chinese government’s half stake in the Port of Newcastle is being transferred to a company that specialises in container ports, although it will need Foreign Investment Review Board approval.
The putative new owner is arguably the biggest operator of container ports in the world, but the Port of Newcastle’s local management have played down the importance of the transaction, calling it “a not uncommon practice”.
The latest twist in the recent history of the privatised port was unveiled earlier this month when a company called China Merchants Port Holdings Company Limited announced to the Hong Kong stock exchange that it intended to buy a 50 per cent stake in the Port of Newcastle from two related companies – China Merchants Union Limited and Gold Newcastle Property Holding Pty Ltd – for $607.5 million.
China Merchants Port Holdings said its half stake in Newcastle was its first investment in “Oceania”.
It has expanded dramatically in the past decade, buying into ports in Belgium, Djibouti, France, the Ivory Coast, Malta, Nigeria, South Korea, Sri Lanka, Taiwan, Togo, Turkey, and the United States.
The Port of Newcastle was privatised in 2014 for $1.75 billion to a 50/50 joint venture between Chinese and Australian interests. Soon afterwards, the new owners revalued the business to be worth $2.4 billion – a figure noted in this month’s statement from China.
The Newcastle Herald asked the Port of Newcastle’s management why a half-share in a business valued at $2.4 billion was being sold for $607.5 million, but received no direct answer.
Instead, a spokesperson said: “The proposed transfer, which will be reviewed by the Foreign Investment Review Board, is a transfer of shares from one company to another within the China Merchants Group. This is not an uncommon practice in the global infrastructure sector.”
As the Herald has reported at length, the Coalition state government privatised Newcastle in such a way that effectively prevents it from building a container terminal to challenge Port Botany. In an important move in December, Port of Newcastle signalled its discontent with the situation, with new chair Roy Green saying the company wanted “a level playing field for the development of a viable and competitive container terminal.”
The Chinese statement said buying the half share in Newcastle gave the new owners an opportunity to use their “port and park” development model. This has been described as the way China Merchants Group has built “purpose-built port-cities” in Shekou, Shenzhen, and other Chinese cities since the 1980s.