AusGroup pressed on Port Melville project after ADF knockback

The developers of a Tiwi Islands port are under pressure to reveal whether their project remains viable.

Port Melville, on the Tiwi Islands, is owned by Singapore-listed but Perth-based AusGroup. Picture: Amos Aikman.

The Singapore-listed developers of a multi-million-dollar port on the Tiwi Islands are under pressure to reveal whether the project remains viable after revelations that US and Australian military forces have no interest in using it.

Documents obtained by The Australian show Port Melville, on Aboriginal land north of Darwin, was once forecast to generate $240 million in revenue and $60m in profit in the five years to 2015.

Other documents show that, under those estimates, traditional owners could have received about $12m through a profit-sharing ­arrangement on top of the $380,000 annual lease premium agreed for use of their land.

Port Melville has been billed as a model indigenous economic ­development, with repeated claims it will yield scores of jobs and other opportunities. But when the facility opened for business in November, years late, it had just one customer — the Tiwi islanders.

Port Melville is owned by Singapore-listed but Perth-based AusGroup, which bought it from another Singapore-listed firm, Ezion, in 2014. Last month, AusGroup warned of a possible breach of debt covenants before surprising the market with a $69m half-year loss, blamed in large part on problems with the Tiwi project.

This month, The Australian ­revealed that the US and Australian militaries had no interest in using Port Melville, contrary to written claims by the head of ­AusGroup’s marine division, Larry Johnson, who was previously with Ezion and has led the project since it began in 2010.

Labor NT senator Nova Peris called on AusGroup to urgently reveal its plans. “In light of the news that the US and Australian militaries won’t be using Port Melville for fuel or ammunition storage, it’s imperative that the ­viability of the Port Melville project be assured,” she said.

“The Tiwi people cannot be left with the remnants of a failed project. I’m personally extremely distressed at the thought of the Tiwi people losing out on economic development again.”

AusGroup’s outgoing managing director, Gerard Hutchinson, last month told share-trading website NextInsight that his company was relying on income from the Tiwi islanders’ own struggling woodchip enterprise to keep Port Melville afloat.

Port Melville is at the centre of a high-profile legal case in which conservationists are challenging federal Environment Minister Greg Hunt’s decision to allow the project to be completed without an environmental impact assessment. AusGroup says the case has delayed commercial contracts.

In an email to the NT government sent before Port Melville was sold, the head of Tiwi Plantations Corp, Roger Smith, wrote that an agreement between his organisation and the port operator stipulated “both parties will pay each other 5 per cent of their gross revenues across Port Melville”.

“For TPC, this is an annual payment of $1m to Ezion,” he wrote. “It can be expected that as Ezion’s business at Port Melville grows, Ezion’s payments to TPC will be substantial.”

On the basis of revenue and profit forecasts, and that 5 per cent figure, the windfall to islanders could have been about $12m.

Instead, construction ­delays helped push the plantation business close to bankruptcy, leading to a bailout deal with the NT government that was later criticised by the NT Auditor-General.

AusGroup, Mr Johnson and Mr Smith did not respond to written questions and invitations to comment.