PSA gets role in Dalian Port expansion
Singapore operator expected to secure 50pc stake in third phase of mainland terminal's 4b yuan expansion project
Dalian Port (PDA), the eighth-largest port operator on the mainland, will probably sell as much as 50 per cent of the third phase of its expansion project to Singapore's PSA International, according to industry sources.
Although the third-phase expansion was still subject to government approval, sources said PSA was 'highly likely' to secure the stake because of the close relationship between the two companies.
A spokesman from Dalian Port declined to comment.
'PSA is involved in every single container terminal project in Dalian,' an analyst said.
The port operator gained its first foothold on the mainland in 1996 when it formed a joint venture, Dalian Container Terminal, with Dalian Port's parent, Dalian Port Authority.
The joint venture, in which PSA holds a 49 per cent stake, was granted the right of first refusal on the development of container terminals in the city, according to Dalian Port's listing prospectus. That means Dalian Port is obliged to make an offer to Dalian Container Terminal for any potential port projects in the city.
The third-phase expansion, with an annual capacity to handle 3.2 million teu (20-foot equivalent units), could increase the entire port's capacity by more than 50 per cent, Dalian Port executive director Jiang Luning told Reuters at a business conference in Shanghai.
The expansion project would cost about four billion yuan, Reuters reported, without naming the potential foreign investors.
The project would not start before 2008 as it had to wait until the second phase was completed, analysts said.
Dalian Port will build four berths in the second phase in Dayao Bay, in which PSA, Cosco Pacific and Dutch APM Terminals are the joint-venture partners.
International port operators and shipping companies are keen to tap into the mainland's port market.
Dalian Port is particularly attractive since it is situated in the Bohai Rim area and has handled more than 70 per cent of the container throughput in northeastern mainland.
The company, which handled 20 per cent more container boxes last year to 2.6 million units, raised $2.16 billion last month in a Hong Kong initial public offering. The deal attracted $184.04 billion worth of orders.
Shares of Dalian Port surged 68 per cent from its offer price of $2.575 on its first trading day on April 28. They rose 5.19 per cent to $4.05 yesterday.