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10th December 2018

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An aerial view of Ports of Auckland from the west.
SUPPLIED
An aerial view of Ports of Auckland from the west.

A rift has opened up between Auckland Council and the Government over how the future of the city’s port will be decided.

Mayor Phil Goff says there’s a risk that a Government-appointed working group looking at the upper North Island ports might have pre-determined whether Auckland’s council-owned port could move, and if so where.

Goff said he put a “robust” view to the working group’s chair, former Far North mayor Wayne Brown, in a private meeting last week.

A council commissioned study found shifting the vehicle import trade, could lose Auckland $1 billion
BEVAN READ/STUFF
A council commissioned study found shifting the vehicle import trade, could lose Auckland $1 billion

He said Brown’s public rejection of two potential locations identified by a council study didn’t give confidence, and the group didn’t appear to have enough time or resources to do a proper job.

The council on Tuesday approved a blunt letter to be sent to Brown, ahead of the council’s first formal meeting with the working group in just over a fortnight.

Goff favoured the eventual shift of the port from its current location on the downtown waterfront, but was unhappy with the approach being taken by the working group.

The council will tell the group that its priorities include protecting the value of Ports of Auckland, which last year paid it a $51.1 million dividend.

It is also telling the working group it wants a transparent, objective and evidence-based approach to reviewing the future of the ports in Auckland, Tauranga and Whangarei.

Auckland Council has conducted the most detailed work so far on the future of its port.

Previous mayor Len Brown funded out of his office budget the Port Future Study, which in 2016 found the port might not outgrow its current site in 50 years, but that work should begin on identifying alternatives, in case it did.

Before the 2017 elections New Zealand First advocated an early shift of the vehicle-import trade from Auckland to Northland’s port.

The coalition government including New Zealand First took a bigger picture approach, setting up the Upper North Island Supply Chain Strategy working group, in line with a request from Auckland Council.

New Zealand First MP and Regional Economic Development Minister Shane Jones who oversees the working group, has since been vocal on matters relating to the future of Auckland’s port.

At the start of November Jones said he would do all he could to head-off a planned multi-storey carpark building planned by Ports of Auckland, to house vehicles arriving in the port.

“Public statements have created the impression of pre-determination,” said the council in a letter to the chair of the working group Wayne Brown.

Brown has made public comment favouring a move to Northland, including an opinion column published in November 2017 before being appointed to chair the group.

“Imagine the Auckland waterfront without used cars getting the best views,” Brown wrote.

“Watch for self-justifying job-saving promises from Ports of Auckland to fend off any sensible moves like Sydney has made keeping the harbour just for cruise liners and sending cargo to Wollongong and Newcastle.”

The council’s letter pointed to comments by Brown.

“Indicating a strong preference for relocation of some or all of POAL activities to Northport prior to any analysis is unhelpful,” said the letter which Goff will sign.

“Any plans to move all or some of the Port’s functions requires the concurrence of its owners, the people of Auckland, through Auckland Council,” said the letter.

“I’ve already said to the chair, we’ve put a lot of work into two future options (Manukau Harbour and Firth of Thames) and you’ve dismissed this out of hand, which gives us no confidence,” Goff told today’s planning committee meeting.

The council has spelled out 10 areas it wants the working group to examine closely.

These include the feasible capacity of all upper North Island ports, as well as the climate change impacts of moving freight to and from the ports.

It wanted work done on the social and community impacts of any change, and how and when a future new port would be funded.

The council will have its first meeting with the government’s working group on December 13.

 

New railway line to Marsden Point being investigated by KiwiRail

KiwiRail to investigate Marsden Point railway – Photo / File

KiwiRail has started work on geotechnical investigations along a section of the new route for the proposed rail-link to the port at Marsden Point in Northland.

KiwiRail Acting Chief Executive Todd Moyle says the scoping work will inform the business case for Northland rail currently being developed by the Ministry of Transport.

“We’ve held a designation for this rail spur for several years, and are very pleased to be now taking steps to determine how the line would be built,” says Moyle.

“These investigations will provide us with more detailed information about the design and potential construction methods for the link, as well as costs and timeframes.

“To begin with, we’ll be working at Mata Hill over the next few weeks, using a drilling rig to take samples from a number of locations,” he says.

These will bore up to 30 metres into the ground to remove samples for analysis.

“We are also investigating what associated works would be needed on the North Auckland Line to allow for more freight to be carried by rail to and from Northland,” says Moyle.

“The Government has indicated its strong support for the value rail delivers in the regions and the benefits it brings for New Zealand by taking trucks off the road, improving safety and reducing carbon emissions.

“The work we are doing in Northland is one of a number of projects underway to ensure we deliver stronger connections for a better New Zealand,” he says.

South Port positioning itself for carbon neutral future

South Port held its 2018 AGM on Thursday.
ROBYN EDIE/STUFF
South Port held its 2018 AGM on Thursday.

South Port is reducing its carbon emissions in a bid to stay competitive as New Zealand moves towards a carbon neutral future.

At it’s annual general meeting, held on Thursday, South Port chairman Rex Chapman said to shareholders the ports geographical position put it closer to other import sources and it could be leveraged in terms of reduced carbon emissions.

Chapman believed the port would be in a good position as the country started to reduce its carbon emissions under the Paris Agreement.

New Zealand has agreed to reduce its carbon emissions by 30 per cent below 2005 levels by 2030.

The company had implemented a number of initiatives to reduce its carbon footprint like putting antifoul on the hull of tugboats and pilot vessels to reduce fuel use.

More cargo was being transported by rail to the intermodal freight centre in Invercargill, instead of on trucks, leading to a reduction in carbon emissions, Chapman said.

This year, South Port had an after-tax profit of $9.66 million, up from $8.45m in 2017.

Cargo flows had increased from roughly 3 million tonnes to more than 3.4 million tonnes, a record level for the port.

Bulk cargo continues to be the mainstay of the business, representing 85 per cent of cargo volumes coming through the port, Chapman said.

This year, logs and woodchips exceeded the one million tonne mark for the first time in the port’s history and is the largest contributor to the volume and profit, he said.

Because of the the drought during the summer, a record volume of stock feed was imported at 212,000 tonnes.

The replacement of ageing infrastructure was expected to make an impact on future profit, as maintenance expenditure has been lifted and will continue to increase over the next five years, Chapman said.

South Port chief executive Nigel Gear said it has been 58 years since Island Harbour was completed and several assets were nearing the end of their useful life.

Work was currently under way to replace some of the piles that supported the rail and road bridges that provide the only land access to the Island Harbour, Gear said

Estimates are that earnings in the next financial year will likely be 10 per cent lower than 2017/18.

South Port is working with Mataura Valley Milk see whether it can provide the purpose-built nutrition plant to see if it can provide a distribution channel for importing an exporting cargoes.

Another potential client was Plaman Global, who is looking to mine more than 30 million tonnes of a rare organic black diatomite near Middlemarch, Central Otago, Chapman said.

The mineral would be used as a natural and organic animal feed additive that could reduce antibiotic usage, stimulate growth and improve both feed quality and gastrointestinal health in animals.

Chapman noted that there was tension in the markets as a result of the tariff war between the United States and China.

However, trade forecasts for the port remain steady with forestry exporters predicting healthy export market conditions in China, India and Japan.

The board has said it plans to keep paying the current dividend of 26 cents.

 

Napier Port share sale a potential catalyst for change

Fund managers say the Napier Port share sale could be a catalyst for a wider shake-up.
Fund managers say the Napier Port share sale could be a catalyst for a wider shake-up.

Hawke’s Bay Regional Council’s proposal to sell and list up to 45 per cent of the port on NZX was an “an interesting and surprising” development, said James Lindsay, senior portfolio manager at Nikko Asset Management.

Listing the firm would help ensure it worked to achieve decent returns by looking after its New Zealand customers and suppliers. Subject to the pricing “we’d be fully supportive of them having something listed on market,” he said.

The council is embarking on a six-week consultation process with its ratepayers and favours selling up to $181 million of shares in the business. That would leave it with a controlling stake in a growing business, sufficient cash to fund environmental projects it plans, and a more diversified investment base.

Other options the council is seeking feedback on include the sale of a minority stake to a partner – which it thinks would raise less money – the sale of a long-term lease to an operator – which could raise the most money – or retaining the current structure and raising rates by 45 per cent to fund the port’s expansion.

Craig Stent, head of equities at Harbour Asset Management, believes there would be good interest if the listing goes ahead.

Port of Tauranga has delivered strong returns over many years and Napier would give investors an exposure to Hawke’s Bay’s agriculture and horticulture industries.

“They are fairly safe, defensive investments with a reasonable amount of growth – although that growth is somewhat linked to local GDP growth.”

New Zealand’s ports, previously run by elected harbour boards, were corporatised in 1988. The history of those that listed is mixed.

In 2010 the New Zealand Institute of Economic Research found the major ports had delivered substantial returns since corporatisation. But it also said they had considerable scope to improve their performance and that council ownership had been an obstacle to rationalisation within the sector.

But Ports of Auckland was delisted in 2005. The regional council, having extracted any surplus capital from the firm during the preceding 12 years, bought out the minority holders citing diminishing returns and the need to rationalise the city’s waterfront.

Talks on a possible merger with Tauranga ended in early 2007.

The port, which has a stake in Northport’s parent company, also built inland freight hubs at Wiri, Mt Maunganui, Longburn and now Horotiu. Longburn is operated in partnership with Napier Port.

In August, the government named a five-member panel to review the freight and logistics system in the upper North Island. Its brief includes assessing the feasibility of relocating the Auckland port business to Northland long-term.

Lyttelton Port Company was delisted in 2014, eight years after Christchurch City Holdings had proposed such a move as part of a plan to appoint Hong Kong-based Hutchison Port Holdings – the world’s biggest operator – to run the business.

That transaction withered after Port Otago bought a 10 percent blocking stake. Otago and Lyttelton investigated a merger in 2008 but that has not proceeded.

Stent said it would be encouraging if other councils – such as Christchurch and Auckland – relooked at a sell-down for their ports. Both cities have needs for capital elsewhere and could still retain a majority interest.

Mark Lister, head of private wealth research at Craigs Investment Partners, said the whole sector would benefit if more ports were subject to the investor scrutiny that comes with listing.

“If you get that across the country you get a much, much more efficient port system everywhere rather than some of them being poorly run because councils aren’t insisting on those commercial drivers.”

While he welcomed Napier Port’s potential listing, Nikko’s Lindsay believed there was still too much duplication in the sector. Running them each as separate businesses, each spending time and money investigating and new technologies like automation, was not efficient for the country.

“I think a consolidation of some of them to optimise the freight network for New Zealand would be a really good thing.”

An option that would encourage that was the operating lease model that Lyttelton and Napier had investigated and which has proven successful in Australia and other parts of the world.

Lindsay said that would leave councils full ownership of the port land and assets, and the operating company could get on and drive efficiencies. Having a single operating company for multiple ports would encourage greater optimisation across the country and further reduce costs.

Hawke’s Bay regional councillors initially favoured a 50-year lease of the Napier Port operation, which it estimates could raise $466m – leaving the council $366m to reinvest. Listing is expected to raise $181m and leave the council with $83m for reinvestment.

But the council was conscious that most of the interest in an operating lease would be from overseas players. Nor was it confident about committing the region to a 50-year partnership and what it would take to maintain that relationship.

The council said it was “concerned around values alignment and the importance of ensuring a clear and direct connection between the port, its staff, the local community and management.”

The option remains among four the council is consulting on.

“There’s huge value being lost in New Zealand Inc. for that model not being instigated,” Lindsay said.

Washout jeopardises Wairoa-Napier railway reopening

Plans to get logging trains moving between Wairoa and Napier by the end of the year could have been derailed by a washout during the storm in northern Hawke’s Bay.

A fortnight after the washout, ruining 45 metres of the track just north of Raupunga, KiwiRail is non-committal to a date for the reopening of the line, and is still assessing the problem.

The washout has left the railway track suspended. Photo / Duncan BrownThe washout has left the railway track suspended. Photo / Duncan Brown

“Our teams are continuing to assess the damage and any impact it may have on the planned reopening date for the line,” KiwiRail said in a short statement today.

The line has been closed for more than six years since KiwiRail decided it was uneconomical after a major washout which left about 100 metres of track suspended in the air near Mahia on the Wairoa-Gisborne sector in March 2012.

KiwiRail had put the cost of repairing that sector at over $3.5 million, and mothballed the line, which had been used only for freight trains since Cyclone Bola put an end to regular passenger services in 1988.

Haami Hilton, kaumatua, blessing a work train in anticipation of the railway line reopening. Third from left is Shane Jones, regional economic development minister. Haami Hilton, kaumatua, blessing a work train in anticipation of the railway line reopening. Third from left is Shane Jones, regional economic development minister.

Help was rejected by the government of National Party leaders John Key and Bill English, but the new Labour coalition in February announced a $5 million contribution from the Provincial Growth Fund to reopen the line for logging trains to relieve pressure on the highways amid the growth of the Wall of Timber from forestry harvesting in Northern Hawke’s Bay and Gisborne-East Coast.

The washout is north of Raupunga, on the way north towards Wairoa. Photo / Duncan BrownPhoto / Duncan Brown

During a ceremonial launch of the project in June, including the dispatch of a train from Napier with track ballast as part of the railway restoration, regional economic development minister Shane Jones sand KiwiRail chief executive Peter Reidy weren’t putting a precise date on the reopening, but Mr Jones said it was hoped there’d be 2-3 trains from Wairoa to the Napier Port each week within 12 months.

This picture shows the extent of the washout. Photo / Duncan BrownPhoto / Duncan Brown

It’s estimated there will be close to 6000 less logging-truck trips on the 116km stretch of State Highway 2, which has had several passing bays installed and the major work of the Mata horua Gorge realignment and bridge, but still includes winding stretches, and the notorious bend of the Devil’s Elbow between Napier and Tutira.

NZ Intermodal Transport Safety Group formed

A new body has been formed to establish and maintain best practice safety and compliance standards for all road transport operators loading, handling and delivering intermodal imported and exported freight.

The NZ Intermodal Transport Safety Group (NZITSG) is to address the significant safety and other issues associated with the interface between road transport and other modes associated with import and export freight.

The NZITSG provides the road transport industry a single and convenient portal to talk with government, officials, port management, manufacturers and other stakeholders impacting road freight operators working in the import/export arena.

“We can achieve a lot more to improve safety and compliance once all the key industry players are working collaboratively than we can doing our own separate things,” says Group Chair Murray Young.

“It also makes sense for the industry to have information disseminated down through the Group and on to the businesses affected rather than having each company trying to engage with WorkSafe NZ, ports, manufacturers and training institutions on their own.”

As a sign of the industry’s commitment to improving workplace safety 21 separate transport companies were involved at the NZITSG’s initial August meeting. At that meeting the Group’s members were elected, essentially representing the interests of the majority of road freight transporters operating in this space.

The Group’s first major project will be to improve sidelifter safety. A number of companies have shared internal policy that will be incorporated into an industry code of practice for the use of sidelifters.

The NZITSG is also engaging with Worksafe NZ, manufacturers and educational and qualification institutions such as MITO to assist with development of the code of practice.

“The use of the Sidelifter Code of Practice, while recommended, will not be mandatory although the mandatory requirements that will be referenced in it cannot be avoided,” says Young.

“It is the intention of the NZITSG to make compliance uncomplicated and make sure that needless costs or compliance burden are not unnecessarily placed on operators. This Code of Practice will be the simplest and most effective mechanism available for industry to develop for the improvement of safety and compliance. The alternative is to wait for government to intervene and take a heavy-handed regulatory approach.”

The Group’s members represent each of the main port regions throughout New Zealand and are:

• Murray Young – NZ Express Transport – Christchurch

• Ian Pauling – CODA Group – Auckland

• Calven Bonney – L.W. Bonney & Sons– Auckland

• Mike Herrick – TDL Group – Auckland

• Grant Darrah – Reliance Transport – Auckland

• Clinton Burgess – CODA Group – Tauranga

• Nigel Eden – Tomoana Warehousing – Napier

• John Anderson – LG Andersons Transport– Wellington

• Richard Smith – Hilton Haulage – Christchurch

• Mark Purdue – H.W.R Group – Dunedin

The Road Transport Forum is providing secretariat services to the NZITSG.

The Port of Tauranga has become a megachurch: too big to touch

Pipi beds die and algae blooms, but iwi are repeatedly told ‘there’s nothing to see here’, writes Graham Cameron. 

When the Tainui canoe entered Tauranga harbour a millennium ago, it had the misfortune to run aground on a then prominent sandbar called Ruahine that sat below the waterline between Matakana Island and Mauao.

The Tainui was refloated and continued on its journey; the incident in which the Ruahine sandbar was central is remembered in a well known Tauranga Moana tauparapara:

Pāpaki tū ana ngā tai ki Mauao, i whānekenekehia, i whānukunukuhia, ka whiua reretia Wahinerua ki te wai, ki tai wiwi, ki tai wawa, ki te whai ao, ki te ao mārama.

You may well hear that tauparapara at our marae, but you won’t see the Ruahine sandbar if you walk Mauao. By 1970 the sandbar no longer existed. It’d been destroyed in the process of widening and deepening the harbour and entrance for the establishment of the Port of Tauranga.

Our church is progress, and in the Bay of Plenty, the megachurch is the Port of Tauranga. Megachurches tend to not so much follow the law as create the law; the news that the Port of Tauranga has operated without a consent for stormwater for the past 27 years came as no surprise to tāngata whenua in Tauranga Moana.

The Port of Tauranga is a shining city on the hill. It’s the engine that drives almost everything here. Logs, kiwifruit, steel, palm kernel, coal and containers all flow in and out, like the lungs of our economy. Cruise ships visit in increasing numbers – loved by local retailers, despised by locals who remember a time when it was all for them.

The port is jobs, but not great jobs: casual, no longer zero hours but definitely not certain hours, de-unionised, long shifts and efficiency first. The port is jobs and the Port of Tauranga has kept bread on the table for many of our old people and our whanaunga since its inception.

For all intents and purposes, the Port is a religious idol in our privatised, profit, growth and market driven New Zealand. And like all true and holy idols, it’ll brook no opposition – it’s central to the power of the political and economic elite.

The Port of Tauranga is 54% owned by the Bay of Plenty Regional Council. The designation ‘regional council’ means that the 54% owner of the Port of Tauranga is also responsible under the Resource Management Act 1991 for managing the effects of using freshwater, land, air and coastal waters by issuing resource consents. For example, resource consents for stormwater discharge from ports.

Where parties fail to get a consent or follow the conditions of a consent, they can be fined or prosecuted. In 27 years of stormwater discharging into Tauranga harbour from the Port of Tauranga, the Bay of Plenty Regional Council has never fined or prosecuted the port.

The past 27 years are a series of false starts. The first consent lodged in 1998 never went anywhere because the port was slow in providing information requested by the council. The Regional Council then tried to couple the port’s consent with another for the Tauranga City Council. That failed because they couldn’t agree on who was liable for what discharge. Then it was revealed that Beca, contracted to do the consenting by the port, had lost the paperwork. The third application was lodged in 2013, but apparently nothing happened because of five years of consultation. We are now onto the fourth application. It is unlikely the port will be compliant this year.

When Radio New Zealand’s Checkpoint investigated this, everyone seemed disappointed with themselves, but not exactly up in arms. Stormwater doesn’t sound all that worrying. And the stormwater runoff from the Port of Tauranga is not notably toxic.

David Culliford looked into the stormwater runoff at the Port of Tauranga in his 2015 thesis ‘Characterisation, potential toxicity and fate of storm water run-off from log storage areas of the Port of Tauranga’. As best as anyone can tell, it’s all within acceptable limits, but Culliford’s work is clear that requires more research. The runoff from the log storage includes bits of wood, resins, chemicals and at times raw effluent. The runoff can slightly lower the pH of the water which is shown to affect the development and behaviour of marine life. There are periods of acute toxicity, particularly from raw effluent during storms. The runoff is detectable to over 60 metres, indicating there’s likely a wide spread of whatever impacts exist. At the moment there isn’t a good base of research as to the impact of dredging on sedimentation and toxicity. Which led to the conclusion that all is essentially well.

But sit at a table during a hākari at any of our marae, and we all know something is wrong. Pipi beds disappear. That’s not abnormal, but the increasing regularity and the size of the beds that have disappeared is a change. There are places where you don’t collect pipi anymore because they’re unsafe. There’s so much more sea lettuce than we ever had before. Algal blooms are normal; we are often told we can’t eat our kaimoana. Most people just ignore the warnings. And we’re told by our Port and our councils that it’s normal, that it’s seasonal, that it’s always been like this. It hasn’t always been like this.

The uncomfortable reality today is that the Port of Tauranga is too big to be allowed to fail and we can’t afford to stop its growth and development. You will hear few voices calling to limit the Port of Tauranga. Neither their majority shareholder the regional council, nor the local community given how many Mums and Dads have shares in the port, nor iwi.

Our iwi have not held the Port of Tauranga to account. Our lines of defence are quite literally in the sand; we have never halted anything the port wanted to do. If we are to be honest, we have always come around to an agreement with the port. The last instance was dredging that was consented in 2012 where the shipping channel was deepened by three metres to allow cargo ships with nearly double the capacity into our port.

This was only two years after the Rena had run aground on the Astrolabe Reef. As the consent was being considered, a cargo ship carrying logs lost power in the channel and threatened running onto the rocks of Mauao. The dredging at that time included the removal of a section of Panepane, a large pipi bed off Matakana Island.

Even in this instance, as iwi we followed our normal pattern: bold statements and threats of protests; submissions against the consents; the consent granted and challenged at the Environment Court; our agreement to a new oversight committee, some scholarships, the opportunity for shares, and research that will confirm there is nothing to see here.

All of us in the Tauranga Moana community bow our heads to our local religious idol. However passionately we love our harbour and our environment, in the end we are willing to accept the assurances of the Port of Tauranga that they have this under control. We hold these things to be true: the Port of Tauranga will protect the marine environment for us and provide excellent returns every year.

No stormwater consent can pretend to stand as a barrier to such an expression of collective faith. No fine can be allowed to tarnish the reputation of our regional economic saviour, washed clean by the millions of trays of kiwifruit. As we splash at the water’s edge this summer, we will look across to the white steeples of the cranes, and smile at our tamariki, warning them not to eat the pipi because of the algal bloom. And we’ll tell them, don’t worry, everything is going to be alright.

 

Floating dry dock could bring close to $40m a year into Marlborough

A dry dock has been proposed for Shakespeare Bay near Picton.

A dry dock has been proposed for Shakespeare Bay near Picton.
STUART SMITH

OPINION: The many benefits that establishing a floating dry dock at Picton’s Shakespeare Bay would bring to our region cannot be overstated.

This is a valuable opportunity for Marlborough to significantly increase its economic resilience, future growth and provide high-quality, well-paid and reliable career options for our people.

Shakespeare Bay is undeniably a highly strategic place for a dry dock to be located. It’s right in the centre of the country, is handy to Cook Strait shipping lanes and has excellent rail, road and air connections.

The former navy frigate HMNZS Canterbury in an Auckland dry dock.

The former navy frigate HMNZS Canterbury in an Auckland dry dock.

The bay already operates around the clock as part of Port Marlborough’s operations and it is sheltered from Picton and its residents. As the deepest natural berth in New Zealand, minimal or no dredging would be required to operate a dry dock.

According to a research paper prepared by the Shipping Federation in 2015, a new floating dry dock could bring in an estimated $38 million in regional income per year.

This would present a truly significant string to our economic bow.

Kaikōura MP Stuart Smith says a dry dock would bring young workers to Picton.

Kaikōura MP Stuart Smith says a dry dock would bring young workers to Picton.

Concerns have been raised about biosecurity and the environment. The fact is that the water which comes out of the proposed dry dock is as clean, if not cleaner, as when it went in.

The potential for a biosecurity breach is an issue that the Marlborough Sounds is open to on a daily basis. Currently there are no restrictions on pleasure boats and commercial ships coming in and out of the Marlborough Sounds, which means that whatever is on the hulls of those vessels comes in with them.

It is my view that this poses a far greater biosecurity risk than a controlled, self-contained dry dock with water treatment systems in place to capture, treat and dispose of contaminants.

Many of New Zealand’s largest ships that would use the dry dock enter the Marlborough Sounds regularly anyway, including of course the interisland ferries and the Royal New Zealand Navy.

Building dry dock facilities in Picton to service these vessels, rather than sending them to another less suitable port in New Zealand or overseas actually brings better environmental outcomes as well as saving costs which would have been passed on to the consumer.

As I said, the opportunities this dry dock would bring to our region are huge. Picton itself has struggled to retain young people since the loss of the freezing works many years ago. Bringing a major employer to town would draw in, and retain, young people and naturally create positive flow-on effects for surrounding businesses.

Our region really does tick all the boxes as the obvious location for a new dry dock in New Zealand, and it is an opportunity Marlborough should absolutely embrace.

Bulk Cargo Growth Drives South Port Ahead

South Port New Zealand Ltd’s reported after-tax profit for the June 2018 year is $9.66M, up 14% on last year’s result of $8.45M. South Port Chairman, Mr Rex Chapman said, “this is an excellent result for the Port, underpinned by a 13% increase in cargo flows.” Total cargo volume through Bluff set a further record of 3,445,000 tonnes (FY17 3,053,000 tonnes) due to strong growth in bulk cargoes and a positive development in shipping line connectivity.

“The mainstay of our business continues to be bulk cargoes representing 85% of all volumes handled across the Port wharves,” said Mr Chapman.

Revenue from port and warehousing operations equated to $40.7 million ($36.9 million), an increase of 10%. Higher volumes through the Port saw operating profit before financing costs and tax increase by 13% to $13.8 million ($12.3 million).

Net financing costs were $579,000 ($449,000). Earnings per share were 36.8 cents (32.2 cents per share). Net tangible asset backing per share equates to $1.53 ($1.42 per share). In establishing the dividend payment level, Directors took into account sustainable profit plus future maintenance expenditure.

Shareholders will receive a consistent final dividend of 18.5 cents, which sustains a full year dividend of 26.0 cents, fully imputed. The dividend payment represents a gross return of 5.2% (net 3.7%), based on a share price of $7.00 as at 30 June 2018.

A dividend payout ratio of 71% results for 2018 (using reported NPAT) and equates to 61% of free cash flow. Mr Chapman said that “South Port has recently been successful in renewing its insurance cover, including material damage, up to $250 million.” Insurance companies are now raising the issue of whether ports need to carry out additional strengthening work on critical assets in coming years to maintain insurance cover.

This could have significant cost implications for the Port and Management has started to investigate these requirements.

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