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Katie Woolf spoke with Landbridge Managing Director Mike Hughes · 360 with Katie Woolf

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  Speaker 1: There has been quite a bit of discussion in recent
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  Speaker 1: weeks and months about the leasing of the Darwin Port
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  Speaker 1: and the development of the luxury hotel at the waterfront.
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  Speaker 1: Now joining me in the studio to talk more about
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  Speaker 1: this is the managing director of Landbridge, Mike Hues.
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  Speaker 2: Good morning to you, hey, Katie. How are you good?
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  Speaker 1: Really well good? Good to have you in the studio. Now, firstly,
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  Speaker 1: let's talk about the continued controversy surrounding the ninety nine
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  Speaker 1: year lease of the Darwin Port. It is going to
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  Speaker 1: be scrutinized by a parliamentary inquiry as senators for both
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  Speaker 1: sides of politics call for the deal to be examined
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  Speaker 1: under the Coalitions to Foreign veto Power legislation. Does Lambridge
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  Speaker 1: welcome this inquiry.
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  Speaker 3: I'm not going to comment on the inquiry itself, Cadie,
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  Speaker 3: but first of all, it's kind of interesting we're here
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  Speaker 3: five years into the ninety nine yearly still talking about
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  Speaker 3: the issue. You know, we already went through a Senate
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  Speaker 3: inquiry back in twenty fifteen. As you know, I'm on
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  Speaker 3: the record regularly saying we went through a very very
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  Speaker 3: extensive vetting process through the port lease.
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  Speaker 2: Took almost a year the process.
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  Speaker 3: And when we rewarded at the end of that, we
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  Speaker 3: spoke with FERB extensively with government, So you know, I'm
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  Speaker 3: very confident we've been we've been through very extensive vetting
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  Speaker 3: processes and we've been through FERB, and you know, the
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  Speaker 3: last five years we've we've invested extensively in the port,
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  Speaker 3: and you know, really that was the drive for getting
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  Speaker 3: getting the port into private hands. And you know that
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  Speaker 3: investment is good for us, but it's also good for
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  Speaker 3: the territory.
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  Speaker 1: Why do you think the lease always brings up sort
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  Speaker 1: of so much controversy or some people are so concerned
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  Speaker 1: by it.
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  Speaker 2: Look, it's difficult to say.
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  Speaker 3: I think I've certainly felt that anybody who is up
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  Speaker 3: in the territory or visits Darwin and understands the way
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  Speaker 3: the port works and where it is on the ground
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  Speaker 3: and the separation, frankly of the defense activity up here
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  Speaker 3: from the from the commercial port, goes away with very little,
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  Speaker 3: no concern. Certainly, I've never been able to pin down
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  Speaker 3: a precise concern that anybody has that isn't addressed by
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  Speaker 3: the way the lease is put together.
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  Speaker 1: So do you think it's maybe a matter of sometimes
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  Speaker 1: people don't understand how comprehensive that lease actually is.
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  Speaker 3: I'm sure that's the case that there are very significant
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  Speaker 3: protections for the Northern Territory government and Australia to ensure
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  Speaker 3: that the lease the port is operated professionally and for
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  Speaker 3: the interests of territorians and for Australia. And that's what
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  Speaker 3: I've always said, are our interests fully aligned with the
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  Speaker 3: Northern Territory. You know, the territory economy is performing well,
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  Speaker 3: the port's performing well.
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  Speaker 1: I mean, the Senate's Foreign Affairs and Defense Committee, they
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  Speaker 1: will undertake that inquiry which would give the Commonwealth the
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  Speaker 1: power to veto international agreements reached by states and territories
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  Speaker 1: with foreign governments. From your perspective, what would breaking this
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  Speaker 1: lease actually mean?
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  Speaker 2: Well, I'm not.
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  Speaker 3: I'm not sure that that's that's new ground that you know.
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  Speaker 3: You know, it's, first of all, it's a it's a
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  Speaker 3: commercial transaction between a private company and the Northern Territory government.
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  Speaker 3: So on the face of it, it's not it's not
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  Speaker 3: by covered by this proposed legislation. But yeah, yeah, I
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  Speaker 3: don't know breaking commercial leases in some shape or form
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  Speaker 3: would be new ground for Australia and would have very
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  Speaker 3: big knock on implications.
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  Speaker 1: Now, I guess a lot of people again maybe don't
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  Speaker 1: understand some of the work that has gotten underway out
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  Speaker 1: at the port. Can you talk us through what has
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  Speaker 1: been invested and what work has taken place so far.
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  Speaker 3: Yeah, we as to say we're nearly up to the
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  Speaker 3: five year anniversary. So over those five years we've spent
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  Speaker 3: around twenty five million dollars i'd say on growth in
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  Speaker 3: the port. Four or five years ago we spent a
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  Speaker 3: lot of money on dramatically expanding the refrigerator container capacity
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  Speaker 3: and putting down some hardstand We've done a number of things,
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  Speaker 3: but most recently we've just awarded a contract for the
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  Speaker 3: expansion or the improvement and expansion of capacity handling at
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  Speaker 3: Fort Hill Wharf. And that's really about making sure that
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  Speaker 3: when cruise ships return, and as you know that cruise
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  Speaker 3: ships were getting bigger and bigger and bigger, to ensure
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  Speaker 3: that the wharf has sufficient capacity to take those bigger ships.
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  Speaker 3: There are fewer and fewer places around Australia that can
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  Speaker 3: take the really really big ships, and we want to
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  Speaker 3: make sure that Darwin is on the itenery of any
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  Speaker 3: of those cruise ships. That they come back to Australia.
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  Speaker 1: What would that mean in terms of those passenger numbers arriving,
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  Speaker 1: obviously bearing in mind that COVID has had a huge
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  Speaker 1: impact in this space, but what would it mean in
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  Speaker 1: terms of those tourists arriving to the territory.
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  Speaker 3: Well, as you know, I mean the biggest one that's
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  Speaker 3: been here is the Evasion of the Seas that has
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  Speaker 3: a capacity of about four and a half thousand passengers
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  Speaker 3: and fifteen hundred crews, So we're talking about five or
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  Speaker 3: six thousand people coming to Darwin. So I've always been
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  Speaker 3: a big believer that we need to make more out
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  Speaker 3: of those cruise ship visitations.
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  Speaker 2: But if you think in the current environment, if crews can.
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  Speaker 3: Get back up and running, and we hope it will
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  Speaker 3: get back up up and running and maybe March next year,
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  Speaker 3: that is a big source of tourism and revenue back
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  Speaker 3: into the territory.
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  Speaker 1: Now, when we talk about a hotel, it's another one
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  Speaker 1: that people are always asking about, where are things at
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  Speaker 1: and how soon can we expect it to get started?
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  Speaker 3: So look going back to March April, and again, as
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  Speaker 3: we were just discussing, Darwin's perhaps been insulated from a
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  Speaker 3: little bit of the COVID issue, but the world has
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  Speaker 3: fundamentally changed. So we agreed back in a few months
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  Speaker 3: ago with the Territory that we needed to take stock
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  Speaker 3: of whether the business case stacked up for the hotel.
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  Speaker 3: So we agreed that we would take twelve months until
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  Speaker 3: the middle of next year, and at that point either
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  Speaker 3: we would be full steam ahead awarding contracts to go
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  Speaker 3: or that the project would terminate. If you look at
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  Speaker 3: the business drivers for that hotel was really business tourism
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  Speaker 3: and cruise just taking one of those business travel that
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  Speaker 3: there is a substantial view globally that business travel will
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  Speaker 3: never return that. Frankly, six months of people getting used
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  Speaker 3: to video conferencing, we're way beyond them not knowing how
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  Speaker 3: it works. We'll weigh beyond people now getting comfortable. So
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  Speaker 3: a lot of business meetings that historically would never have
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  Speaker 3: been done through video conference are now regularly happening through
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  Speaker 3: video conference. So there's certainly a strong view that business
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  Speaker 3: travel will never recover. Tourism. You know, domestically, Darwin actually
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  Speaker 3: may get a bit of a may get a bit
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  Speaker 3: of a kick out of this. I think of domestic tourism,
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  Speaker 3: but international tourism, which was one of the other business
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  Speaker 3: drivers for the hotel, Southeast Asia and so on. Who
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  Speaker 3: knows when that's going to come back. So we're going
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  Speaker 3: to have a good hard look at whether the business
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  Speaker 3: case stacks up, how COVID moves over the next three
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  Speaker 3: to six months, and then make a final decision. But today,
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  Speaker 3: you know, the business case doesn't stack up the way
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  Speaker 3: it did three or four years ago.
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  Speaker 1: So at this point in time, it's still a very
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  Speaker 1: very much an unknown as to whether that hotel will
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  Speaker 1: indeed be constructed or not.
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  Speaker 3: For sure, for sure, as I say today, if you
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  Speaker 3: were starting afresh today, there isn't a business case for
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  Speaker 3: the hotel. So we need to see what happens over
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  Speaker 3: the next three to six months such a way that
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  Speaker 3: goes ahead. And you know, we've spent a lot of
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  Speaker 3: money getting to this point, so for us, it's a
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  Speaker 3: very difficult decision to walk away, but you know, a
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  Speaker 3: two and a million dollar investment. Similarly, we need to
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  Speaker 3: have a view that the business case stacks up.
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  Speaker 1: So these next will, these next three to six months
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  Speaker 1: will no doubt be pivotal. I mean, if that business
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  Speaker 1: case doesn't stack up, the potential here is that that
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  Speaker 1: land is handed back to the Northern Territory government.
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  Speaker 2: That's right, and so.
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  Speaker 1: We'll know a little bit will probably more towards the
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  Speaker 1: end of next year, won't we So the.
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  Speaker 3: Date we've agreed the decision is by the end of June,
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  Speaker 3: So by the middle of next year, well we'll know
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  Speaker 3: where things stand. Say we'll either go back to the
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  Speaker 3: territory and then at least if there is some other
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  Speaker 3: opportunities for that site, then that can move forward, or
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  Speaker 3: we'll be moving ahead with construction.
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  Speaker 1: Is it?
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  Speaker 2: I mean, is it?
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  Speaker 1: I guess everybody understands at this point in time, like
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  Speaker 1: you touched on, the coronavirus has had such a massive
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  Speaker 1: impact in so many ways. Is the reality here that
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  Speaker 1: really we'll get to next year and find that it
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  Speaker 1: probably doesn't stack up.
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  Speaker 3: If I was a betting man, I'd say yes, I
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  Speaker 3: you know, I think a lot, a lot would have
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  Speaker 3: to happen in the right direction.
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  Speaker 2: For it for it to stack up.
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  Speaker 3: It was a big investment and it was always predicated
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  Speaker 3: on strong growth in those sectors I mentioned. So, so
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  Speaker 3: take cruise was another opportunity where we were talking a
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  Speaker 3: year ago about exponential growth in cruise out of Asia.
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  Speaker 3: You know, that new booming market of Asians cruising which
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  Speaker 3: had never happened. Strong growth in Australian cruising, strong growth globally.
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  Speaker 3: It was easy to look at how you know that
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  Speaker 3: continued growth and cruising more of those people than having
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  Speaker 3: having somebody come and stay in Darwin and do kaka
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  Speaker 3: doo and well, all of that's up in the air,
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  Speaker 3: whether cruise does come back as strong, whether the large
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  Speaker 3: ships continue, whether we're back into you know, maybe boutique
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  Speaker 3: cruising being what happened. So it's it's another example where
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  Speaker 3: it's very difficult to feel very positive about about that market.
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  Speaker 1: Yeah, I mean, has has it, really though, been just
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  Speaker 1: the coronavirus situation or has the Northern Territory become a
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  Speaker 1: more difficult place to do business?
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  Speaker 2: Yes, no, I don't think so. I think I think
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  Speaker 2: fundamentally it's COVID. As I say those.
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  Speaker 3: Examples, I talked about a fundamental changes in the way
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  Speaker 3: people spend their time, and you know, I mean, I
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  Speaker 3: don't know, you know, if only Scott to Darwin yesterday,
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  Speaker 3: but my first trip by the way in nine months,
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  Speaker 3: but you know, people are certainly thinking hard about traveling
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  Speaker 3: overseas about whether they go on holiday, what they're doing,
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  Speaker 3: and you know, the business world has changed.
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  Speaker 2: So COVID has fundamentally changed the world.
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  Speaker 1: I think, yeah, there's no doubt it's become a really
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  Speaker 1: different world. I think to do business, particularly for a
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  Speaker 1: business like Lanbridge that obviously is based in China and
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  Speaker 1: then you're trying to do work right across the other
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  Speaker 1: side of the world in the Northern Territory. How difficult
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  Speaker 1: has it been as well for Lanbridge to do business
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  Speaker 1: at the moment with the strain to the China Australia relations.
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  Speaker 3: Has that had an impact well, of course has had
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  Speaker 3: an impact, I'd say though, I mean the port here fundamentally.
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  Speaker 3: You know, we've been obviously able to We've continued investing
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  Speaker 3: in the port. We're continuing to try and grow trade.
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  Speaker 3: You know, the port's going going going pretty well at
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  Speaker 3: the moment, and so in some ways the port can
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  Speaker 3: can you know, we can continue to make that grow.
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  Speaker 3: But obviously the relationship with China and the rest of
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  Speaker 3: Asia was something that that we certainly felt we could
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  Speaker 3: leverage and we could we could see some further investment
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  Speaker 3: inward investment and some further growth that's clearly not help
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  Speaker 3: by a strain relationships between Australia and China.
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  Speaker 1: So it does sound as though while the while the
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  Speaker 1: hotel development is in jeopardy at this point in time,
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  Speaker 1: the port continues to operate really quite well and Landbridge
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  Speaker 1: does continue to believe that there's a future for them
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  Speaker 1: here in the territory.
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  Speaker 3: Oh. Absolutely, I think the port, the fundamentals of the
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  Speaker 3: port are still good.
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  Speaker 2: Although we had a little bit.
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  Speaker 3: Of a a little bit of drop in revenue last year.
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  Speaker 3: You know, clearly crews stopped for you know, six will
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  Speaker 3: probably stop for a year probably in total, and there's
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  Speaker 3: been a bit of cutback in all of gas activity
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  Speaker 3: with all prices. But fundamentally the port is still doing well.
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  Speaker 3: We're a big believer still in the territory economy long term.
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  Speaker 3: So yeah, we're keen to keep investing in the port
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  Speaker 3: and see the port grow and see the territory economy grow.
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  Speaker 1: Do you think there's real potential for the Northern Territory
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  Speaker 1: economy still? I mean, I know that there's we've had
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  Speaker 1: a few bad years, but through COVID, do you think
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  Speaker 1: that there could be an opportunity for us realistically to
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  Speaker 1: come out on the other side better than what we
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  Speaker 1: went in.
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  Speaker 3: Look, I still think it's a long term I think
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  Speaker 3: there are still the same fundamentals are there. You know,
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  Speaker 3: you have the sort of mineral exports side, you have
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  Speaker 3: the agricultural side, which is really, really, actually going strong.
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  Speaker 3: I think you must have talked here about cotton and
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  Speaker 3: some of these other industries that are coming through. We
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  Speaker 3: think they've got great potential. You know, they're probably two, three,
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  Speaker 3: four years away, so differently to a kind of hotel discussion,
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  Speaker 3: you know, I think if you are still willing to
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  Speaker 3: take a five ten year time horizon, I think there's
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  Speaker 3: a lot of potential in the territory and tourism I've
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  Speaker 3: always believed in, but I think unfortunately this has just
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  Speaker 3: given it a bit of a kick down the road
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  Speaker 3: in terms of again that growth probably now five years
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  Speaker 3: away rather than might have been one or two years away.
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  Speaker 1: Well, Lambridge Managing Director Mike Cues, it's really good to
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  Speaker 1: speak with you this morning. I really appreciate you sitting
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  Speaker 1: down with us, taking the time to have a chat,
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  Speaker 1: and hopefully we'll talk to you again in the near future.
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  Speaker 2: Thanks Katie, good to talk to you you too.