Stevedore DP World says Newcastle container cap a major factor in it pulling out

THE head of stevedoring company DP World has said a Newcastle container terminal would be an “attractive opportunity” without the compensation the port would have to pay Botany to set up in competition.

The previously unnoticed statement by chief executive Paul Scurrah at a cargo conference in Darwin last month has been seized on by the Port of Newcastle after Ports Minister Melinda Pavey said it was geography, and not the Newcastle restriction, that led DP World to walk away from negotiations with Newcastle.

Ms Pavey’s office declined to comment on the apparent contradiction late yesterday beyond saying that the Port of Newcastle was aware of the government’s commitment to containers at Botany and Port Kembla when it signed its lease in 2014.

Ports Minister Melinda Pavey

Ports Minister Melinda Pavey

Port of Newcastle chief executive Craig Carmody said he was not trying to provoke the government unnecessarily, but the DP World statement only “publicly confirmed what we knew was a factor at the time”.

“This shows the port commitment deed was a key factor in DP World ending its negotiations with us in July,” Mr Carmody said.

 “Whether the deed is anti-competitive or not is now being investigated by the Australian Competition and Consumer Commission and we are waiting with great interest on the outcome of this process.”

The latest round of the controversy over a potential Newcastle container terminal began on Friday when Ms Pavey was quizzed by Labor in a budget estimates committee hearing.

We have the market deciding where those containers are going,” Ms Pavey said.

“You only need to talk to companies like DP World, which says that the system within New South Wales is market driven and market led.  Ships only like to stop on rare occasions and they want to be able to transact their business at one major port.

Labor MLC Peter Primrose repeatedly asked Ms Pavey about the government imposed restrictions on Newcastle, but Ms Pavey continued to say it was the market that determined the outcome.

“The decisions around that are not ones that government make but that industry make – the carriers, the shipping lines and all those that are involved in that process,” Ms Pavey said.

She said it was “important to understand the arrangements that have been set in place that have been designed because we are following what the market wants us to do".

Mr Carmody said he was glad to hear the minister saying the government would be guided by industry and the market because Port of Newcastle firmly believed the market wanted a terminal on the steelworks site.

“We have been open about the fact that Port of Newcastle has private investors lined up and willing to bet on the Hunter with a major investment in a world-class container terminal in Newcastle,” Mr Carmody said.

Port of Newcastle CEO Craig Carmody

Port of Newcastle CEO Craig Carmody

Asked to comment on the statement by DP World, which was reported in the industry journal Daily Cargo News, Ms Pavey's office said the "transaction arrangements do not prohibit the development of a container terminal at the Port of Newcastle". 

"The Port of Newcastle came to a leasing agreement with the NSW Government in 2014.

“In doing so, it was aware of the NSW Government’s position that Port Botany is the State’s main port facility to both receive and despatch containers, with the main overflow facility at Port Kembla.

“As the commercial organisation operating the infrastructure, the Port of Newcastle is in the best position to consider future markets."

Industry observer Greg Cameron, a major player in the original BHP proposal for the terminal, said the government was ducking the question.

“Regardless of what it says about not prohibiting a terminal, the reality is that it privatised Botany and Kembla in such a way that when Newcastle was privatised a year later, if the consortium wanted the port they had to sign a deed limiting Newcastle to 30,000 containers a year when Botany does two million.

“On top of that, Newcastle has to pay the state, which then gives the money to Botany, about $150 a container for every container over the 30,000. If it was the other way around, Botany would be sending Newcastle $300 million a year.”

“The world’s largest container terminal operator, China Merchants, owns half of the Newcastle port and knows it has huge potential to out-perform Port Botany.”

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