The container terminal expansion hs been on the drawing board since 1991. Photo / Alex Cairns
The wait for an Environment Court decision on Port of Tauranga’s container terminal expansion is nearing six months, creating uncertainty for the company’s share price and investor nervousness, says a market analyst.
Craigs Investment Partners senior research analyst Mohandeep Singh said his firm is questioning the time it’s taking for the court to announce a decision on a resource consent hearing which started in late February.
“The market is waiting for some clarity given the importance of the decision in terms of the port being able to increase capacity for future growth,” Singh said.
“It does create some nervousness for investors and some uncertainty for the share price. It’ll be an overhang on the share price in general because investors don’t like uncertainty.
“This (decision) is a key part of the ability of the port to grow over coming decades. It’s important from a New Zealand perspective because it is a key part of our infrastructure.
“We are a trading nation so it becomes doubly important for our largest port to be able to grow,” Singh said.
Infrastructure New Zealand chief executive Nick Leggett said a decision could have been expected by now.
“They (the court) aspire to a three-month (time frame) after final submissions.
“It’s just bad news for the country.”
In a statement responding to Herald inquiries, the Environment Court said the reserved decision “will be issued in due course”.
The court in advice to the port company said: “...the decision is progressing and will be issued in due course”.
The NZX-listed port company, whose major shareholder is the Bay of Plenty Regional Council, applied for consent to dredge up to 1.5 million cubic metres from the Stella Passage, 50 per cent or 850,000cu m of which is already consented.
It also wants to construct up to 385m of berth at Sulphur Point with a 1.8ha land reclamation, and to build berths at Mount Maunganui, stretching 530m north and 388m south of the existing tanker berth, with a 2.9ha reclamation. In its April 6 final submission to the court, it reduced this from 2.9ha to 1.77ha at Mount Maunganui.
The work is to enable the port to expand its container terminal operations.
It expects to run out of container terminal capacity in two years without the green light for the long-proposed project, now estimated, after continuing regulatory and hearing delays since 2018, to cost $88m.
An Environment Court hearing scheduled for July 2022 was postponed until February 27 this year.
The berth extension has been formally planned since 2018, though it’s been on the drawing board as a potential development since the Resource Management Act was introduced in 1991.
In 2018 the 385m extension was projected to cost $68.5m.
The port, New Zealand’s largest and the nation’s main export gateway, was called on to pay up to $100m towards harbour restoration projects and initiatives by one of several local iwi which challenged its application in the Environment Court.
The call, made by a planning consultant representing the Whareroa Marae and other Ngāi Te Rangi parties, came on the final day of the three-week court hearing earlier this year.
Eleven iwi and hapū groups associated with the greater Tauranga harbour raised unresolved concerns about the port and its plans, citing significant adverse effects on the coastal environment, marine species and diversity, and cultural values.
Craigs’ Singh said the wait for a court decision was “not helpful” to the port’s share price, which along with other stocks was being impacted by New Zealand’s slowing economy and a global trade downturn.
“The thing investors hate most is uncertainty and on top of the economic uncertainty ahead over the next six to 12 months, you’ve got this regulatory/growth uncertainty.
“Even if a favourable decision is forthcoming there’s a huge process to get to a point of building (start) and getting value for the capital expenditure.
“It’ll be an overhang on the share price in general because investors don’t like uncertainty. The delay is clearly frustrating for management as well.”
The port’s shares were trading at $6.18 on Tuesday, down 12.8 per cent on a year ago.
Infrastructure NZ’s Leggett said the port infrastructure was “vitally important” not just to Tauranga and the Bay of Plenty, but a “national priority”.
“This is a national asset and the ability of the economy to be productive relies on its fortunes in putting more containers through more efficiently.”
Leggett said the infrastructure sector advocate was upset the project was declined by Cabinet minister David Parker for the Government’s pandemic fast-track programme.
“It demonstrates where New Zealand prioritises infrastructure. It just doesn’t understand the fact we need to keep building and expanding infrastructure so the country is able to be more productive, do more, produce more, be greener, healthier and compete in our international markets.”