China Merchants Group has joined two other hopefuls in the second round of bidding for Australia's largest container and general cargo port as the company continues its global expansion as part of Beijing’s Belt and Road initiative.

 

The purchase would boost the Australian presence of the parent company of China’s leading state-owned terminal operator, China Merchants Holdings (International). CMHI has already heavily invested in the Australian port sector, paying 1.75 billion Australian dollars ($1.3 billion) for the world’s largest coal port, Newcastle.

 

Second-round bids for the 50-year lease of Port of Melbourne are due in September and the port is expected to sell for 6 billion Australian dollars, although its book value is 4.5 billion Australian dollars.

 

Merchants will cooperate with an Australian partner that may be brought in at a later stage of the contest. Hastings Funds Management was its partner in the Newcastle deal and Hastings could potentially partner again with China Merchants, according to local media.

 

The Melbourne deal comes amid China’s investing billions of U.S. dollars in maritime and inland logistics infrastructure from Oceania to the Swiss Alps as part of Beijing’s efforts to forge long-term trading relationships and protect China’s import and export trade.

 

China has not always been greeted with open arms during its Belt and Road expansion, with countries such as Sri Lanka and Australia citing security concerns over Chinese port investment in recent years, although in both cases the investments went through. The most recent brush with controversy in Australia was the 2015 sale of Darwin Port to China’s Landbridge Group, which has said it is seeking further opportunities in northern Australia to maximize Darwin’s development and throughput.

 

Landbridge is investing $25 million at Darwin, including a 1 kilometer (0.62 mile) quay extension that will allow the port to handle higher container, dry bulk, liquid bulk, live cattle and general cargo volumes.

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