Article – Government paper boosts port of Darwin future

by 9 July 2014

3 July 2014
Cameron Boggs
Lloyds List

Acting prime minister and minister for infrastructure Warren Truss says Darwin is the linchpin of north Australian development.

On June 15, Darwin Port’s East Arm Wharf played host to Mr Truss and Northern Territory chief minister Adam Giles as they inspected the port facilities.

The tour followed the release of the government’s Green Paper Developing Northern Australia.

The paper sets out the government’s view on the major challenges and opportunities facing northern Australia, and the policy directions to tackle them.

“Darwin is shaping as Australia’s gateway to Asia – one of the fastest growing regions in the world, which could be home to half the global middle-class by 2020,” Mr Truss said.

“This green paper reminds us that the northern Australia is vital to our national economy, with 55% (or $121bn) of Australia’s exports shipped from our northern ports.

“The Northern Territory has one of the lowest unemployment rates in the country and investment activity is set to increase by 7% in 2014/15.

“According to the Bureau of Infrastructure, Transport and Regional Economics, the value of exports through Darwin’s port has increased with an average annual growth rate of more than 12% a year over the five years to 2012/13.

“And there is potential for increased exports from current and new mines in the Northern Territory, LNG from the Browse Basin and growing live cattle and beef exports. A new abattoir able to process up to 200,000 head annually is under construction south of Darwin.”

In 2012/13, the value of international exports by sea via northern Australian ports reached $12bn – 55% of the Australian total, according to the green paper. Of these exports, 84% (by value) were coal, petroleum, gas (and related) and crude materials including iron ore.

Additionally, the majority of northern Australia’s resources are exported to Asia – particularly China, Japan, Indonesia and South Korea.

Northern Australia’s proximity to Asian markets provides a competitive advantage for exports over its southern and international counterparts.

“Darwin is closer to Jakarta than to Sydney and the closest major city to Darwin is Dili, the capital of Timor Leste, one of the 10 fastest growing – although volatile – global economies in 2013,” the green paper said.

“This can mean shorter transit times for exported agricultural products. For example, live cattle exports from Darwin to Jakarta can take less than five days on average compared to nine days from Fremantle, contributing to better health and welfare outcomes for the cattle and a higher quality final product.

“There are also opportunities for businesses in the north to establish and integrate within international supply chains – increasing their presence in the region and boosting their competitiveness through more cost effective inputs.

“While there are some industries that are already taking advantage of Asia’s proximity, expanding these opportunities across the north will depend on the requisite supply chains, transport infrastructure (air and sea) and business strategies being in place.”

Infrastructure is often identified as the main barrier to industry growth across the north.

The green paper outlined that capacity constraints could result from a growth in demand for ports by the resource and energy sectors, coupled with increasing competition from the agriculture, tourism and defence sectors.

This can create delays and drive up costs, affecting productivity.

However, such constraints could be overcome by building new ports – as some stakeholders propose – but also by making better use of existing ports and improving the landside networks feeding into them.

In February, the Northern Territory announced it will be considering direct private investment in Darwin’s port infrastructure in an effort to make the facility more competitive, and reduce freight charges.

At the time, Mr Giles said investment in infrastructure to provide greater capacity at East Arm will increase the volumes that can flow though the facility. Increases in volumes will reduce the cost per item for importers and exporters, as well as the flow-on cost to consumers.

Towards this end, he said East Arm would require an investment of more than $380m to substantially increase capacity and create better economies of scale.

“Our port continues to hit new highs, more than quadrupling its loading and unloading capacity and setting a new record in December with the export of 70,000 cattle in a single month,” Mr Giles said as he welcomed the green paper.

Courtesy of Lloyds List

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