Auckland port to pay $24m for Northland stake

By PAM GRAHAM

Ports of Auckland has upped the ante against rival Port of Tauranga by investing indirectly in Northland's main port.

Auckland yesterday disclosed a plan to pay $24 million to the Northland Regional Council for 19.9 per cent of the Northland Port Corporation.

The corporation owns land and half of Northport, a joint venture with Tauranga, which built new facilities at Marsden Pt at the mouth of Whangarei's harbour.

Ports of Auckland chief executive Geoff Vazey said the investment "fitted with our thinking so we were pleased to get the invite".

Northland council chairman Mark Farnsworth said the invitation was issued to Auckland because it was the biggest port in the country and a potential heavyweight ally in efforts to improve the North's infrastructure. The sale of the stake would also diversify the council's investment portfolio.

Marsden Pt is a natural deepwater port where New Zealand Refining also has jetties.

It became the premier sea gateway to Northland when new facilities were opened in 2002 but it has failed to meet profit targets because of the forestry downturn.

"The Marsden port is not humming," said one analyst. "They're considering building more berths but there is a question mark as to whether it is economic."

He said that in the long term the port could handle some of Auckland's trade but it did not have any container cranes.

Market reaction to the news was mixed: Ports of Auckland's share price fell five cents yesterday to $6.65, Tauranga was down one cent to $5.79 while Northport was unchanged.

The analyst said the dividend income would probably not offset the interest costs, but the port could afford the investment, which would be funded by debt.

Farnsworth said Grant Samuel had advised that the $2.90 a share Auckland was paying was fair. The public could put in submissions on the sale during the next month before a final decision was made.

Ports of Auckland did not consult its own 80 per cent shareholder, Auckland Regional Holdings, a unit of the Auckland Regional Council, before making the investment.

Northport and Port of Tauranga were not consulted either and were yesterday taking the line that it was a shareholder issue.

It is not clear if Auckland will have any influence on the board of Northport and Farnsworth said it had not asked for a directorship of NPC. NPC has three directors on Northport's six-person board.

Vazey said: "Just like any other shareholder, we take our chances on all those things." Asked if the investment was designed to have a go at Tauranga, he said: "No. It doesn't matter who is up there.

"We see this as a long-term play and it is a strategic inevitably that Auckland is going to grow towards Whangarei. When you think long term, it makes sense to do things beyond your traditional fence."

Some shipping companies have moved to Tauranga from Auckland because in one swoop imports can be railed to Auckland and exports picked up from the Waikato and Bay of Plenty.

Ports of Auckland is responding by seeking export cargo further afield, looking to connect more with rail and setting up an inland freight-handling site at Wiri.

"What we concentrate on is growing our business," said Tauranga chief Jon Mayson. "If that means some trade moves from other ports to Tauranga, that is an outcome, it is never an objective."

Vazey said the offer for the stake in NPC was cash with no conditions while Farnsworth stressed the value of the Tauranga ties.

Ports of Auckland chairman Neville Darrow said the deal would be a catalyst for a co-operative approach to port development in Northland. Auckland already has a 50 per cent joint venture with Northport which runs Whangarei harbour's piloting, tug and lines service company North Tugz.