Report: Australia to Review 99-Year Lease of Darwin Port to Chinese Firm

Australian defense officials are reviewing a Chinese firm’s 99-year lease of Darwin Port in northern Australia due to “national security” concerns, an Australian government source told Reuters on Monday.

“Defense officials are looking into whether the Landbridge Group, which is owned by Chinese billionaire Ye Cheng, should be forced to give up its ownership of Darwin Port on national security grounds,” the source told Reuters.

“Advice has been sought on the port and that will go to national security committee in due time,” the source added.

Major changes to Australia’s foreign investment laws went into effect in January allowing the government “the retrospective power to impose new conditions or even force a divestment on deals that have already been approved,” Reuters noted. The changes are largely designed to better protect Australian national security.

Landbridge Group won a bidding process in September 2015 to operate Darwin Port on a 99-year lease in a deal worth $390 million. The Port of Darwin is located in the city of Darwin, which is the capital of Australia’s Northern Territory. The port is used for both commercial and military purposes. Darwin city is home to an Australian military base that hosts a rotating group of about 2,500 U.S. Marines annually.

When the Australian government announced in late 2015 that it leased Darwin Port to a Chinese-owned firm, then-U.S. President Barack Obama reportedly expressed his displeasure with Canberra that his government was not informed of the agreement ahead of time. The U.S. had just established its troop presence in Darwin a few years prior in 2011 with the goal of deterring China’s increasing presence in the Indo-Pacific region. The Darwin Port lease deal received further public criticism one month later in November 2015 after the Australian Strategic Policy Institute (ASPI) published a report highlighting Landbridge Group’s alleged links to the Chinese military. The ASPI is an Australian government-funded think tank.

“[I]n August last year [2014], with the support of the [Chinese] People’s Liberation Army [PLA], Landbridge established a people’s armed militia within the company,” Australian scholar Geoff Wade wrote in the ASPI report. Wade, a scholar at Australian National University, made this conclusion after translating a Chinese language report on Landbridge Group’s official website detailing a visit by Chinese PLA officials to the company’s headquarters near the southeastern Chinese city of Rizhao.

The U.S. government in March 2016 said it was concerned Landbridge Group’s alleged links to the Chinese military meant it could be spying on U.S. military activity in Darwin. The U.S. Department of Defense said it was increasingly aware China’s “port access could facilitate intelligence collection on U.S. and Australian military forces stationed nearby.”