Article – Our door to Asia only half open

25 October 2013
Amos Aikman
The Australian

Queues of ships are still unusual at the Port of Darwin. But as interest in developing Australia’s tropical north grows, many fear delays and bottlenecks are certain to come if the port is not expanded soon.
More than 3000 vessels called at Darwin’s port last year, up from 1803 the year before; 4.2 million tonnes of cargo was traded, almost a record; exports rose 21 per cent on the previous year and imports rose 23 per cent. Darwin Port Corporation turned a record $11 million profit.
Corporation chief executive Terry O’Connor is blunt: “We are able to meet the demands that we can; the demands in front of us today. We need additional infrastructure to meet the demands of the future.
“If Darwin really is going to become the central area for northern Australia, then it needs to service both the top of Western Australia and across to the Queensland Gulf area more effectively.”
Closer to Jakarta than to Canberra and 1500km from the next major Australian centre, Darwin is both uniquely placed and uniquely remote. Last year, 17 of the top 18 ports served by ship from Darwin were in Asia.
“It doesn’t matter what anybody thinks or wants to do; if they can’t get the wharf sorted out then nothing is going to happen,” says NT Cattlemen’s Association chairman David Warriner.
Darwin is Australia’s third-largest cruise ship passenger destination, and both sides of politics have feted it as a future oil and gas hub and service centre to the region. But the port is coming under increasing pressure.
Dredgers are working to expand shipping lanes as construction of the $34 billion Ichthys LNG project in Darwin harbour ramps up. As construction activity increases, ships delivering ingredients for concrete visit once every three weeks instead of once every three to four months. The cruising industry finds itself increasingly in competition with the navy.
At present, the port’s main East Arm Wharf has just 800m of quay line and one container crane, which is temporarily broken.
Another 300m will become available once the $110m Darwin Marine Supply Base is finished in January.
Some vessels have access to the much smaller Stokes Hill and Fort Hill wharves.
Planned mining developments could more than double the roughly two million tonnes of iron ore exported annually.
There is the prospect of Queensland uranium being shipped through Darwin (to avoid the Great Barrier Reef) and live cattle exports are also expected to increase.
US Marines are expected to return to Darwin in record numbers next year. The Royal Australian Navy is taking delivery of its largest ever Canberra Class ships, which have special docking requirements.
Once AACo’s meatworks reaches full production, probably early in 2016, it will send an extra 3000 containers a year overseas; most will be refrigerated and will require infrastructure upgrades to store.
“We’ve committed major capital investment in a region with a historically fairly dysfunctional regulatory and support environment,” says AACo’s acting chief executive, Craig White.
He says the plant will bring jobs and boost the economy, and wants to see state and federal governments invest in supporting infrastructure and training.
Earlier this year, Infrastructure Australia said a proposed $300m expansion of East Arm would be “highly likely” to deliver economic benefits exceeding costs incurred, flagging a “significant increase” in port activity over the next decade.
But NT Chief Minister Adam Giles has since revived a dormant proposal to build a second, “dirty” port at Glyde Point north of Darwin. The findings of a scoping study are due in December.
Environmentalists oppose the Glyde Point plan.
O’Connor says: “I think developing a second facility aimed around bulk ore will allow East Arm to focus on container and general break bulk. A port without that logistics stuff behind it isn’t really there.”
Transport connections might also have to be upgraded for businesses, particularly those to the east and west, to take advantage of a bigger port.
While the cost of bulk shipping from Darwin to Asia might be lower than that from most other Australian ports, the Darwin to Adelaide rail link was not conceived as a heavy ore transport line and is less cost-efficient than other mining lines.
“In the NT, transport is dependent on that one major rail line with limited operators on it. That’s the definition of a bottleneck,” says Bernie Hogan, a spokesman for the Association of Mining and Exploration Companies.
“That’s something that the port has to keep in mind; that its customers are already under significant cost pressures.”
Container shipping costs are prohibitively expensive for many businesses due to the lack of economies of scale.
A key question remains: who will pay for the new infrastructure required.
The territory and federal governments have pointed to private investors. But there is a concern among some larger miners that they should not be forced to fund assets the government effectively owns; smaller ones fret they should not be blocked from using new infrastructure by their rivals.
Courtesy of the Australian