A China-backed consortium has won a government auction for a 98-year lease on Newcastle Port in Australia, the world’s largest coal export port, paying a princely sum of A$1.75 billion ($1.6 billion), according to a statement released by the Australian state of New South Wales on April 30.<br /> <br /> The winning consortium, a joint venture between China Merchants Group and Hastings Funds Management, outbid four other competing groups in a fiercely competitive auction that attracted international and Australian investors. The final bid of A$1.75 is more than double of the A$700 million initially estimated by the state government a year ago, the Wall Street Journal reported.<br /> <br /> China Merchants Group is a Chinese state-owned conglomerate based in Hong Kong, with operations in ports, property development, and energy sectors. It owns Loscam, an Australian pallet manufacturer, according to the company’s website.<br /> <br /> Hastings Funds Management is an Australia-based fund managing firm that invests in infrastructure assets including utilities, airports, toll roads and ports in Australia, Britain, Europe and the United States.<br /> <br /> Four other competing bidders consist of Hong Kong-listed Cheung Kong Infrastructure, a consortium of New York-based Global Infrastructure Partners and Deutsche Asset &amp; Wealth management, Macquarie and its partner China Construction, as well as a one from ATEC Rail Group and fund manager TIAA-CREFF, said local media.<br /> <br /> According to Newcastle Port, it exported a record 142.64 million tonnes of coal in 2012/13, primarily to China and Japan. The port’s robust operating results can be partially explained by the “take or pay” contracts with Australian miners, meaning they have to pay for the capacity to export whether they use it or not. Despite a sharp drop in coal prices in China last year, it’s still cheaper to continue mining and exporting at a loss than shutting down the mine, according to industry sources.<br /> <br /> In the current low interest rate environment, investors globally are pouring money into infrastructure assets such as toll roads, ports, and terminals for their stable, long-term returns. Both federal and local governments of Australia are taking advantage of the demand to fill state coffers.<br /> <br /> <p> At end-June 2013, Newcastle Port had a net profit of nearly A$23 million and net cash flow from operating activities of A$27 million, according to its annual report.&nbsp; </p> <p style="text-align:center;"> <img src="/upfiles/news/image/20140505/20140505170132_1497.jpeg" alt="" /> </p>