Plummeting ore prices and lost royalties have forced the Western Australian government to include its prized container terminal and general cargo port of Fremantle in a AUD5 billion (USD4 billion) state assets fire sale.
The proposed sale was announced as part of the state budget on 15 May.
Last year, the government announced the sale of Kwinana Bulk Terminal and Utah Point Terminal, and the privatisation of Port Hedland.
Iron ore junior Atlas was widely touted to take over the Utah facility. However, the fall in iron ore prices has threatened to put Atlas out of business and out of the market for port facilities.
The government has slashed AUD2.50 a tonne in user charges for 12 months at Utah Point in a bid to keep junior miners afloat. This has made the port a less attractive option to buyers.
However, an official for the treasurer assured IHS Maritime that the sale was still on track.
The news of Fremantle port going on the market comes amid controversy linking port fee hikes with the privatisation of container terminals in Newcastle, Melbourne, and Sydney, with Shipping Australia Limited, representing foreign shipping interests in Australia, its foremost critic.
Nevertheless, the Port of Fremantle is expected to come onto the market within the next 12 months and fetch around AUD1.5 billion (USD1.2 billion), following the controversial sale of Melbourne port. Fremantle, Australia’s fourth largest container port, will go up for auction on a 49-year lease.
The port generated AUD67 million in earnings before interest and taxation in financial year 2014 from more than AUD28 billion worth of goods traded through the port.
Meanwhile, the federal budget last week has continued to focus on port access infrastructure, Ports Australia CEO David Anderson told IHS Maritime.
“[This] is where our priorities have been located and where we have had some success with the government in securing acknowledgement for its [infrastructure] importance in terms of the effectiveness of our total supply chains,” Anderson said.
“Secondly, the government announced concessional finance for Northern Australia infrastructure, including roads, railway, and ports – this is all good news for the efficiency of our Northern Australia port network.”