The Australian government is reassessing the controversial 99-year lease of Darwin Port, which was signed in 2015 with the Beijing-controlled Landbridge Group. That’s why the lease approved by the Turnbull government has been widely criticized. A 2018 state audit of Landbridge found serious practices, financial and otherwise, underlying their operations. This potential made it all the more curious when the Northern Territory government sold the Darwin Port a decade ago. Most recently, this critical strategic facility in Australia’s far north has posted record operational performance this year.
New Australian prime minister Anthony Albanese has been adamantly opposed to the sale of Darwin Port. Yet Stafford thinks it was a “stupid” decision from the get-go. As the government evaluates options to potentially terminate the $506 million contract with Landbridge, reports indicate that Landbridge experienced a net loss exceeding $34 million in the 2023-24 financial year.
Financial Concerns Emerge
The findings from Landbridge Group’s external audit carried out by PricewaterhouseCoopers (PWC) exposed shocking financial misconduct. Even with a record operational performance at Darwin Port this year, the company’s financial condition looks shaky. The net loss cited calls into question their ability to remain a viable ongoing concern under the established lease agreement.
Terry O’Connor, a representative for Landbridge, stated, “Landbridge and Darwin Port have not been involved in any discussions with the federal government concerning our lease arrangements.” This new claim makes the negotiations more contentious. It impacts what concrete action might develop out of the federal government’s new review process.
In fact, the Australian government has no strong regulatory system to manage risks to critical infrastructure such as Darwin Port. The Department of Prime Minister and Cabinet supports keeping the lease as is for the time being. They fail to recognize the importance of changing or repealing it now. There is one escape hatch provision that enables termination if Landbridge is forced to dramatically change its financial structure.
Government’s Stance on Infrastructure Security
Albanese used his speech to draw attention to increasing alarm around foreign ownership of critical infrastructure. He really put the emphasis on closely examining the terms of the lease. “I will have more to say about China’s lease of Darwin Port before election day,” he remarked, indicating that this issue will be a significant part of his campaign platform.
Even Richard Marles, the Deputy Prime Minister, got in on the act on a recent port visit. He noted that “with additional security that’s been provided by the Northern Territory government, by ourselves, [and] with the Americans’ own security, they were very complimentary about this specific visit and the way in which they have been handled.” This comment highlights the long and repeated attempts to improve security and oversight around facilities like Darwin Port.
Future Considerations for Darwin Port
Despite Landbridge’s claims of viewing the port as a “long-term investment,” its recent financial performance raises questions about its sustainability. Terry O’Connor expressed optimism for future growth, stating, “We expect this growth to continue in the future.” Whether this ambitious projection matches up with reality is still up in the air as the federal government continues its public review.
Security concerns aside, the Darwin Port is an immensely valuable asset for Australia, with growing strategic importance as a trade and logistics hub in the region. Arbitrary changes in ownership or lease terms have the potential to do great harm to our national security. Or they might just upend economic stability.
