Newcastle chairman: coal puts port at financial risk
The newly-appointed chairman of the Port of Newcastle Board has said that the port's reliance on coal - which accounts for 90% of its business - as its core cargo puts the facility at financial risk.
Speaking following his appointment, Professor Roy Green said that while the commodity would remain central to the prosperity of the port, plus the Hunter Region in Australia in which it is located, for some time, there was an urgent need to diversify both the port’s business and the region’s economy.
Professor Green described the long-term outlook for coal as “a threat to the Port and Hunter region” – though he also said that it was “a huge opportunity”.
“While the world’s demand for our coal is beyond our control, our ability to invest in new sources of growth and innovation is not,” he said.
“Among our challenges will be ensuring a level playing field for the development of a viable and competitive container terminal.”
Professor Green explained that though the port had begun diversifying through investments in a new cruise terminal and non-coal freight facilities, it needed to build significantly on this and create “world class port facilities that are able to meet the needs of a rapidly changing Hunter and New South Wales economy”.
“With a 98-year lease, the Port of Newcastle is obliged to think long-term, and it will,” he said.
Rob Henderson, former chief economist for markets at National Australia Bank (NAB), called Professor Green’s announcement “indicative of the seismic shift underway in the world of power generation and investment”.
Mr Henderson said that the port moving to a lower-carbon setup, as well as actively preparing for the time when less of the Hunter Region’s wealth and income is made from coal, should reaffirm to investors the quick shift away from carbon currently occurring, as well as the ideas that continued investment in Australian coal is doomed to fail (in the medium to long-term) and diversification is critical.
“With AGL Energy shutting its Liddell power plant in the Hunter in 2022 and looking to replace that capacity with renewables, it is no wonder that the Port of Newcastle is looking to diversify its business,” he explained.
“Professor Green’s plans to cash-in on the cruising tourist market and the growing container traffic in the Hunter make sound economic sense.”
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