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International relations

Chinese owner of Australia's Darwin Port rejects security worry

Landbridge executive insists 99-year lease 'purely commercial'

Landbridge Group executive Vincent Lai warned the company will demand compensation if Australia cancels its lease over Darwin Port.    © Reuters

HONG KONG -- The Chinese operator of the Australian port of Darwin on Wednesday defended the company's investment as "purely commercial," rejecting security concerns that spurred Canberra this month to launch a review of its 99-year lease.

The lease deal, worth 506 million Australian dollars ($392.44 million), has come under focus amid a drastic cooling of relations between Beijing and Canberra. The U.S. military uses a naval base close to the port and Washington has complained about the Chinese presence since Australia's Northern Territory signed the lease with Landbridge Group in 2015.

"The lease is purely commercial, it has nothing to do with security," Vincent Lai, chief executive of Landbridge's Hong Kong unit, which holds the lease, said at a news conference in the city.

Referring to talk of Landbridge as a security threat, he said, "These kinds of comments have severely harmed the company's business activity and reputation." Lai warned, "If the government finally rips up the contract, the company will require compensation."

Already frosty relations between Australia and China have only chilled further in recent weeks. Canberra canceled two Belt and Road Initiative deals struck between Beijing and the state of Victoria. Beijing, for its part, suspended a bilateral economic dialogue and is moving ahead with the trial of Australian writer Yang Hengjun on espionage charges.

Over the past year, China has taken measures to block or curb imports of Australian coal, cotton, barley, beef, lobsters, timber and wine. Beijing has indirectly linked its moves to what it sees as hostile actions by Canberra, including a call to investigate the origins of COVID-19, blocking Huawei Technologies from 5G phone networks, halting investment deals and investigating Chinese influence on its domestic politics.

Privately held Landbridge has been less prominent in China's overseas port investment push than state-owned Cosco Shipping and China Merchants Group, but in addition to Darwin, the company is leading a $1 billion project to build a new deep-water container port near the Caribbean entrance to the Panama Canal. The group's website puts Landbridge's net assets at 30 billion yuan ($4.68 billion).

Lai said that Landbridge has been living up to the terms of its Darwin lease, investing AU$20 million in the port since 2015 as promised. He said the port has generated earnings before interest, tax, depreciation and amortization of AU$10 million to AU$20 million a year.

He did not directly address speculation about Landbridge's links to the Chinese government and military, simply saying that foreign governments had previously investigated its background. "What we notice is that all of them have been satisfied," he said.

Separately, in a newspaper opinion article published in Australia on Wednesday, Mike Hughes, managing director of the group's unit there, said: "To suggest that we could control the entry of foreign naval vessels into Australian waters is risible. So is the suggestion that we would block Australian or U.S. naval vessels entering Darwin."

Additional reporting by Cora Zhu.

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