Port of Newcastle says Newcastle needs a container terminal

IN a profoundly important step, the private operators of the Port of Newcastle say they want to see a “viable and competitive” container terminal in the port.

They have made their intentions clear despite knowing the Coalition State government privatised the state’s three biggest ports in a way that hog-ties Newcastle into compensating Port Botany should it go into competition with it over containers.

And they have signalled that their move is at least partly driven by the likely decline of the global coal industry and the impact that would have on the world’s largest coal port.

Port of Newcastle Investments, a 50/50 joint venture of Australian and Chinese interests, paid $1.75 billion for a 98-year lease of the world’s biggest coal port in April 2014.

The Newcastle lease came a year after the government raised $5.1 billion for a 99-year lease of Port Botany, the state’s main container port, and Port Kembla.

CHANGE IS COMING: The new chair of the privatised Port of Newcastle, Professor Roy Green, says the port and the region need a large-scale container terminal as insurance against the decline of coal.

CHANGE IS COMING: The new chair of the privatised Port of Newcastle, Professor Roy Green, says the port and the region need a large-scale container terminal as insurance against the decline of coal.

After repeatedly denying that any such deal existed, the government was forced to back-track in July last year when the Newcastle Herald obtained a copy of a “strictly confidential” deed that protected Port Botany from container competition.

Despite the Herald’s revelation, and pressure from Labor politicians claiming the secret deed breached national anti-competition laws, the Australian Competition and Consumer Commission has declined to become involved.

News of Port of Newcastle’s determination to diversify has coincided with the appointment of a former Hunter resident as its new chairman.

Port of Newcastle has appointed Professor Roy Green to the role, replacing Rob Neale, a former chief executive of the Queensland-based New Hope Coal

Professor Green was until August the dean of the University of Technology Sydney’s business school, having held the role for nine years. He moved to UTS from the University of Newcastle, where he was heavily involved in restructuring plans for Newcastle in the wake of BHP’s 1999 decision to stop steelmaking in the city. In an ironic twist, it was BHP that first proposed a Newcastle container terminal, in 1997, as a replacement use for the steelworks site, which is still mostly empty space 20 years later.

Also importantly for the challenge that Port of Newcastle will face, Professor Green has been chair of the Queensland Competition Authority since June 2015.

The Port of Newcastle’s chief executive, Geoff Crowe, said Professor Green’s wide-ranging experience both here and overseas would add significant value to the port in its strategy to grow and diversify.

“Professor Green also has a strong understanding of the Hunter region’s competitive advantages, having worked at the University of Newcastle through the 1990s, including close engagement with the BHP Newcastle steelworks transition and Hunter economic development bodies,” Mr Crowe said.

Professor Green said it was an honour to take on the role at such a pivotal point in the port’s evolution.

“Coal has been at the heart of the Hunter's economy for the better part of two centuries, and it will continue to be central to the prosperity of the region and Port of Newcastle,” Professor Green said. “There is also an urgent need to diversify the Hunter economy and the port's business.

“Whilst the outlook for coal is what it is, it also provides a stable foundation, enabling us to invest in new sources of growth and innovation. Among our challenges will be ensuring a level playing field for the development of a viable and competitive container terminal.”

Professor Green said the port’s 98-year lease meant the consortium was “obliged to think long term, and it will”. He said the port was already diversifying, through investments in a new cruise terminal and non-coal freight facilities.

“But we must build significantly on this platform and create world class port facilities that are able to meet the needs of a rapidly changing Hunter and NSW economy,” Professor Green said.

He said the fortunes of the port and the Hunter economy were “inextricably linked, as it is impossible to have a thriving port without a thriving regional economy”.

“Anything that is good for the Hunter economy is good for the Port of Newcastle,” Professor Green said. “We are all in this together.

“As chairman, I will stand up for the interests of the Hunter and regional NSW and work tirelessly with those who share our vision of a growing, diversified and innovative Hunter economy.”

Although BHP first championed the Newcastle terminal, and although Port of Newcastle’s state-run predecessor – Newcastle Port Corporation – worked with a number of private operators on what was known as a “multi-purpose terminal” on the steelworks site, nothing came to fruition.

One person who never lost faith in the concept is former BHP public affairs officer, Greg Cameron, who has spent years lobbying for a major overhaul of the state’s container strategy, believing Newcastle is better served to move containers in and out of Sydney than an increasingly congested Botany.

Mr Cameron welcomed Professor Green’s appointment, saying: “No-one knows better than Roy Green the significance of a container terminal to the region’s economic future.

“Starting with Bob Carr in 1997, all NSW governments have taken deliberate actions to prevent a container terminal at the Port of Newcastle. Roy Green’s appointment shows this company is starting to take regional economic development seriously.”

Newcastle was earmarked as the state’s next container terminal after Botany until all limits on its capacity were lifted in 2012. But the real barrier is the protection given to Botany in its privatisation, which means any Newcastle container terminal  must compensate Botany by about $100 per container, or enough to make such a business unviable. Newcastle is limited to 30,000 containers a year, with 6 per cent annual growth. Botany shifts about 2 million boxes, with no capacity limit.