WHEN the Port of Newcastle was privatised on a 98-year lease in 2014, the general expectation was that the new operators would earn enough from the coal industry to make their investment a profitable one.
But two things have transpired to somewhat puncture that view.
Firstly, the new operator tried to lift its shipping charges – arguing they stayed the same for many years – but was stopped after a legal challenge by coal giant Glencore.
Secondly, the worldwide swing against coal – begun by climate change but accelerated by big improvements in renewable energy technologies – has meant that the long-term outlook for a business based on “clipping the ticket” on coal shipments is not what it was. But successful businesses do not succeed by blinking in the face of challenge, so the Port of Newcastle has decided to get serious about diversifying the sort of trade coming in and out of Newcastle harbour.
The cruise ship terminal is a start, but the Australian-Chinese syndicate running the port knows that cruise ships alone are not going to do the job. The only way to really diversify is to develop the business the Hunter was promised by BHP 20 years ago as it prepared to wind down the steelworks: a fully fledged container terminal.
BHP initially worked with P&O on a Newcastle terminal, and then, when the state government took control of BHP’s Hunter holdings in 2001, the project moved onto the government’s books. And there it stayed, going nowhere under Labor and Coalition governments alike. Then, last year, the Newcastle Herald revealed that Botany had been privatised in such a way that Newcastle would be obliged to compensate it – at a ruinous rate – if it wanted to compete on containers.
Clearly, Port of Newcastle has some big challenges ahead of it if it is serious about seeing a container terminal come to fruition.
Most importantly, it will have to show that such a project will stack up financially, and then against a mindset that says most inbound containers are destined for the Sydney market, therefore the terminal should be at Botany.
Port of Newcastle will have done its homework before coming out the way it has, and will presumably explain its intentions more fully to the public, the Hunter’s business leaders, and the government, as time goes on. As things stand, its announcement is an early Christmas present for the region.