Ownership storm brews over Lyttelton port expansion

Saturday, 19 July 2025

Te Awaparahi Bay, east of the existing port infrastructure, where reclamation work is under way to prepare for the next stage of Lyttelton’s container terminal expansion.

Lyttelton Port Company’s $800 million expansion plan is raising fresh speculation about the future of one of Christchurch’s most valuable public assets and who might ultimately own it.

The proposed Te Awaparahi Bay development comes as the port faces flat trade volumes, limited capacity, and increasing competition from PrimePort Timaru, which is backed by Port of Tauranga.

While the plan is considered essential to maintaining Canterbury’s role in national freight networks, uncertainty over how it will be funded has fuelled speculation about outside investment or partial privatisation of the ratepayer-owned asset.

Graeme Sumner, chief executive of Lyttelton Port Company, says the business case for the expansion is still being finalised and will need board approval.

The expansion would allow Lyttelton to berth larger vessels and increase container throughput from about 520,000 to 850,000 standard 20-foot containers (known as TEU) each year. The port has already ruled out funding the entire cost through debt.

LPC chief executive Graeme Sumner has previously said the port “will not borrow the full $800 million” and would need external capital, though he has stopped short of saying from where.

Unclear funding raises sale questions

That lack of clarity has intensified speculation around a potential partial sale or long-term lease of port assets to a third party, particularly following a series of private meetings between CCHL and global logistics giant DP World in the second half of 2024.

According to internal correspondence released to The Press, CCHL met Dubai-based DP World three times between July and December, including one session showcasing the company’s Boxbay automation technology. None of the meetings were formally minuted.

CCHL has stated the engagements were part of general “market sounding” activities and maintains that no negotiations around the sale or lease of the port have taken place. It also insists it holds no mandate to pursue such a course without formal CCHL board approval and public consultation.

However, the meetings have triggered concerns among city councillors. Both Melanie Coker, who is now on the CCHL board, and Yani Johanson have lodged formal information requests, seeking full details of any external engagement relating to port operations and potential co-investment.

Private meetings spark political concern

Their concerns are partly driven by DP World's stated interest in establishing a presence in New Zealand, including past discussions with Auckland Council. That interest would likely extend to LPC if co-investment, a sale, or an operating lease were ever considered.

Johanson said for many residents, a long-term lease would be indistinguishable from a sale. “The feeling of residents is that this is tantamount to asset sale… if you’re going to have a long term scenario where another company is going to have basically effective ownership,” he said. “It’s the same thing as an asset sale, in my view. I mean, you’re basically ceding control.”

However, he expected any proposal to lease out the port’s operations would first come before the council.

An artist’s impression of the proposed Te Awaparahi Bay wharf and terminal, which would increase the port’s capacity to 850,000 TEU a year.

He also warned against lack of transparency ahead of the next local election. Candidates who supported selling or leasing assets should disclose their views “before people go to the ballot box,” said Johanson.

Those concerns were echoed by Mayor Phil Mauger, who publicly denied any intention to sell LPC, saying on social media last week that “any suggestion that I plan to sell Lyttelton Port Company is categorically untrue”.

Yet the discussions, however informal, have renewed debate about whether part of the port could be put on the block to raise the necessary capital.

Asset sales have long been politically fraught in Christchurch. While they may offer a short-term injection of capital, they also raise fears of losing strategic control over key infrastructure.

CCHL has also acknowledged holding similar meetings with other major players, including Maersk and MSC, saying it is critical to stay informed about changes in the global shipping and logistics sector.

In its recent Statement of Intent, LPC noted that “all capital expenditure will be carefully scrutinised for affordability” and said it would work with CCHL on “long-term capital planning”. But no further detail on funding sources will be made public until the business case is completed and submitted.

While no firm date has been given for presenting the business case, LPC says it is advancing the work in order to deliver the new Te Awaparahi Bay wharf by the early 2030s, if approved.

Lyttelton Port handles the majority of Canterbury’s containerised imports and exports.

The port has warned it will no longer be able to berth enough vessels of sufficient capacity by 2029 or 2030.

This is because global shipping lines are increasingly deploying larger vessels to improve fuel efficiency and reduce per-unit freight costs.

The new wharf, which already holds the necessary consents, would allow two large vessels to berth at the same time. Currently, only one can be accommodated.

Strategy faces operational and financial headwinds

Before construction of the wharf can begin, LPC must complete its ongoing reclamation work at the site. Ten hectares were completed in 2019, followed by another 6ha in 2020. The current phase, costing $50 million, will add 7ha and is expected to be finished by December 2026, despite opposition from local iwi.

Economist Benje Patterson said the expansion was not just about future-proofing infrastructure, but about securing Canterbury’s economic resilience.

“Ports are equally about getting exports out of the country to earn a good income, and getting necessary resources into our area in an efficient manner,” he said.

Christchurch mayor Phil Mauger denies any plans to sell the port, calling claims “categorically untrue.”

Although the scale of the proposed expansion may seem ambitious, Patterson said it aligns with long-term strategic planning.

“An increase of capacity isn’t needed in the very short run or even the medium term. But when it comes to our ports, you’ve got to future-proof. You need to be able to withstand any potential demand scenarios that occur in future.”

Lyttelton’s ability to handle freight efficiently is critical to its long-term competitiveness, Patterson added.

Christchurch City councillor Yani Johanson has called for greater transparency in discussions about port ownership.

“We often see that larger ports are able to more efficiently handle freight in a more cost effective manner.”

LPC’s 2024 annual report paints a mixed financial picture and does not reflect a business in expansion mode. Revenue rose by $12.1m to reach $193.8m, but this was largely the result of pricing adjustments rather than increased trade activity.

Container throughput was effectively flat at nearly 450,000 TEU, down 1.6% from the previous year. Bulk cargo volumes declined by 9%, with sharp drops in log and vehicle imports, both of which are core trades for the port. These figures point to subdued operational growth at a time when the company is proposing a major increase in capacity.

Despite this, LPC returned a $10.6m dividend to CCHL in the year ending June 2024, up from $6.6m in 2023. It aims to lift this further to $11.49m in 2025 and $13.39m by 2027.

The dividend targets come amid wider pressure on CCHL from the council to deliver higher short-term returns, a key factor behind the resignation of four independent CCHL directors last year who cited a breakdown in governance and concerns about the long-term financial sustainability of such demands.

The ability to maintain or grow dividend payments is a key measure for both CCHL and Christchurch City Council, which rely on these returns to fund wider city operations and infrastructure investment.

One driver of the expansion is increasing competition from PrimePort Timaru, which is half owned by Port of Tauranga. That alliance gives Timaru access to Tauranga’s integrated national logistics network, including inland ports and rail links, strengthening its appeal to South Island exporters.

LPC has its own inland port facility at Rolleston, but Patterson said the regional network could be strengthened further if both ports continue investing.

“The reality is, it’s a good thing for the region to have two ports that are both investing and can handle significant capacity,” he said.

“We’ve seen during major weather events that having some latency in the system makes us more resilient.”

Still, he warned Lyttelton must keep pace to remain competitive.

“You’ve always got to invest to put your best foot forward against competitors. If Lyttelton doesn’t invest in capacity, other contenders like Timaru would happily accept that additional demand in future.”

Patterson said inland freight hubs like Rolleston are complementary to port infrastructure, not a replacement.

“These hubs can go hand in hand. They’re ultimately about investment in the same supply chains.”

– Additional reporting by Sinead Gill