International disputes affect proposed Sydney container terminal
Chinese financing put on hold; Sydney Harbour Investment Partners announces backing from U.S. firm
The company trying to build a container terminal in Sydney, N.S., says it had to find a new financial backer because Canada's relations with China had put the project on hold.
Sydney Harbour Investment Partners had struck a financing deal with China Communications Construction Company, which is controlled by the Chinese government.
But this week, the container developer announced a new deal with New York investment firm Avaio Capital.
Albert Barbusci, CEO of Sydney Harbour Investment Partners, said two diplomatic issues set the project back.
A year ago, the federal government blocked the Chinese purchase of Canadian engineering firm Aecon. Then in December, Canada arrested an executive with Chinese telecom giant Huawei at the request of the U.S.
Barbusci said after those events, he needed to look for other funding.
"Our relationship with the Chinese is still very good, very solid," he said. "But that said, one needs to have a Plan B and a Plan C, and we do have both options on the table."
Barbusci said the proposed container terminal still needs a customer, but the elements are now in place to make that happen.
"The Avaio Group are now our new financial partners, which simply means that we don't need funding from any other source," he said. "We don't need funding from the carriers. At this point, they'll see that we are now shovel-ready."
Design phase starting
Shipping lines should find the project more attractive, now that it has funding and is going into the detailed design phase, Barbusci said.
"If you had a customer and you didn't have the financing, you still couldn't move forward," he said. "So we have all but the customer, and I'm pretty happy to be in that position."
Finding a shipping line is crucial before construction starts, Barbusci said.
"It's not a build and they will come. Before they make a decision, it's important for them to know that everything else is in place, and we are there," he said.
"We were there a year ago. Now, circumstances are what they are. China decided to stand down. We moved to our Plan B."
Chinese interests could come back in at any point, he said, but that's not necessary.
Once a carrier is signed, construction is expected to take about 36 months, Barbusci said.
The terminal is aimed at two markets: transshipping containers from larger vessels onto smaller ones, and taking containers off and sending them overland by rail.
Barbusci said the container terminal project is estimated to cost $1.5 billion, but the first phase would be roughly $600 million.
That would include at least $100 million to restore the rail line across Cape Breton, which has been unused and in a state of disrepair for years.
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