Sime Darby Expands China’s Weifang Port

This involves investing some RMB2.8 billion (RM1.4 billion) over the next three years to expand its port operations in Weifang. Weifang is located in the Shandong Province, which is the third biggest province in China in terms of economic size. A further RMB700 million (RM350 million) investment is being considered depending on economic factors.

Weifang Sime Darby Port’s five-year development plan involves raising its capacity to handle over 50 million metric tonnes (MT) of cargo per annum by 2017. Today, Weifang Port is handling around 18 million metric tonnes of cargo. At the end of five years, the total number of berths at the port is envisaged to be nearly double of what is available today.

Tun Musa Hitam, Chairman of Sime Darby, said the expansion highlights the growing importance of China to the Group. “China is now the strongest growth engine of the global economy. Its economic status has a significant impact on the rest of the world and there is no doubt that it could become the world’s largest economy in the near future. China has attractive incentives and policies that create a conducive business environment for foreign investors like Sime Darby and we are certainly glad to be a part of its growth,” he said.

The Sime Darby Group has operations in over 13 provinces in China. In 2011, Sime Darby’s profit before interest and tax from its total China operations doubled to around RM600 million from around RM300 million previously, reflecting the healthy growth of its different businesses in China.

Weifang Sime Darby Port posted a turnover of around RMB180 million (RM90 million) in 2011, more than double of what was achieved in 2007. Its profit before interest and tax rose to around RMB100 million (RM50 million) in 2011, from around RM25 million in 2007. This was mainly due to the rise in throughput handled by the port.

Weifang Sime Darby Port is strategically located in the prime region of Bohai Sea’s economic belt. It is 50km away from Weifang City, a prefecture-level city in central Shandong Province. It is also just 67 nautical miles to Longkou Port and 139 nautical miles to Tianjin New Port – the largest port in Northern China. This makes Weifang Sime Darby Port to be one of the preferred feeder services for shippers within the greater Weifang and neighbouring industrial hinterlands.
Sime Darby President and Group Chief Executive Officer, Dato’ Mohd Bakke Salleh stressed the Group’s commitment to China, particularly in the ports business where prospects remain bright.

“Our ports business is one of our key expansion strategies in China. We have ambitious plans to grow and we will double our efforts to make speedy progress. We want to be a leading port player in Shandong,” Bakke said.

Sime Darby has invested some RMB20 billion (RM10 billion) in China from 2007 until 2011. Up to last year, the Group had invested some RMB2 billion (RM1 billion) in its ports & utilities businesses in China.

Weifang Sime Darby Port currently has berths stretching 2,375 metres in length.  12 berths are fully operational and three new 20,000 MT berths are now under construction and will be ready by 2013. The port handles more than 30 different types of cargo like raw salt, grain, coal, petroleum and liquid products.

There are also plans to build around eight new berths to handle containers as well as liquid and general cargo. This will be complemented by the construction of a railway track on the west-side of the port and access roads connecting the new terminals.

“Weifang Sime Darby Port has been recognised by the Shandong Government and the Binhai Economic-Technological Development Area (BEDA) as one of the four most important ports in the Yellow River Delta. We will improve Weifang Port’s capabilities by expanding and expediting construction of more berths, storage and other handling facilities,” said Mr Timothy Lee Chi Tim, Executive Vice President, Sime Darby E&U, China Operations.

BEDA was established in August 1995 as an initiative to spur the economic growth of Shandong. Crucial to BEDA’s masterplan is the construction of an 80 km seaport logistics park with Weifang Sime Darby Port as its main freight hub for the transfer and distribution centre to other feeder ports in the region.
Apart from Weifang Port, Sime Darby also operates three other river ports in Jining, a prefecture-level city in the Shandong province. The Jining North Port sits along the northernmost point of the 1,776km Grand Canal of China, also known as the Beijing-Hangzhou Grand Canal – the longest ancient canal or waterway in the world.

The Guozhuang Port or City Port, is a satellite inland river port that stretches 1,060 metres along the canal in the greater Jining city region. Located in the southern region of Jining is the Longgong Port or the South Port.

Sime Darby has exclusive rights to develop and operate four coal ports in Jining with a combined capacity of 17.5 million MT a year. Sime Darby also has the right to develop another three ports in Jining and one in Zaozhuang, which is just outside the Jining area.