Darwin port: Australia’s gateway to Asia

Darwin port

Darwin port. Credit: Australia Aerial

 

The Port of Darwin in Australia’s remote north may be one of the world’s smallest ports, but it boasts the title of the world’s biggest in livestock exports. It is also Australia’s northern gateway to Asia and a major oil and gas (O&G) hub for gas fields Bayu Undan, Bonaparte, Browse Basin, and Greater Sunrise in the Timor Gap. 

Darwin was voted Australia’s port of the year in 2014. Lately, however, it has been making headlines for very different reasons. In October 2015 the port, which also includes a US naval base, was privatised. The winning bidder for the century-long lease was the Chinese Landbridge Group. Eyebrows were raised, not least in Washington, as tensions in the South China Sea between China and its neighbours intensified, especially considering that Landbridge has connections with China’s People’s Liberation Army. A US poll found that 90% of Australians were displeased with the move. Likewise, Chinese feathers were ruffled by the survey results and by Darwin acting as staging port for joint US-Australian naval drills. 

Darwin is a link in China’s One Belt, One Road initiative. It provides Chinese naval and commercial vessels access to Australia, the Indian Ocean, and the South Pacific, and provides Australia closer ties to Asia. 

Under the lease, Landbridge now manages and runs the new greenfield port facilities at East Arm, 17 km from the city of Darwin. The lease also includes Darwin Marine Supply Base and the city’s Fort Hill Wharf.

The Northern Territory government maintains a 20% share in the port, Stokes Hill Wharf, and Frances Bay facilities, as well as regulatory functions. 

In defence of privatisation, the government cited the AUD506 million (USD293 million) price tag and the more than AUD200 million in capital investment that Landbridge has pledged over the next 25 years.

“One of the first activities under Landbridge has been to fast-track construction of a new hard stand area to be used for increased refrigerated container connections,” Darwin Port CEO Terry O’Conner told IHS Fairplay. “Demand in Asia for products such as meat, seafood, and other agricultural products will continue to grow.”  

China is Australia’s biggest trading partner, accounting for almost half of total trade (48%) out of the port in financial year 2015. The China-Australia Free Trade Agreement (ChAFTA) should enable a shift from mining to agriculture and service industries. The Landbridge port ownership, according to O’Conner, promises to bring further Chinese investment to develop northern Australia.  

Meanwhile, a downturn in China’s demand for steel has hurt the port. All three iron ore mines in the territory have shut down. Bulk exports out of Darwin dropped by 60% in FY 2015, with the iron ore trade ceasing altogether.

There are just not enough cattle to fill the gap, one industry insider told IHS Fairplay. Overall exports slipped by 40% in FY 2015 to 1.3 million tonnes, while livestock exports rose by 40% to 613,473, with most going to Indonesia, Vietnam, and the Philippines. However, this still only made up 14% of exports. 

Vessel visits to the port were down by 46% as the Ichthys liquefied natural gas project has progressed past the main construction phase and so fewer vessels involved in the work called at the port. However, rig tender visits to the O&G support facility, Darwin Marine Supply Base, increased by 36% to 484. 

Next to dry bulk, most of the trade is petroleum and general cargo imports from Singapore (28%). The introduction of ANL shipping services brought more container vessels to the port.

The Port of Darwin is linked by a 3,000 km freight line to Adelaide in Australia’s south, site of the nation’s largest biodiesel plant, the AUD55million Vopak Terminal, as well as the Northern Cement facilities.

“The future for northern Australia is bright,” O’Conner said. “Darwin port is focused on ensuring it is positioned to meet any demand.”

Contact Zoe Reynolds