Terry O’Connor, Australia non-executive director of Chinese company Landbridge, which operates Darwin Port, told Reuters that a Cerberus executive met with the port’s Chief Executive Peter Dummett a fortnight ago and expressed interest, but had not yet spoken with Landbridge’s board.

Cerberus did not respond to a Reuters request for comment.

Landbridge has previously said the port is not for sale, and that it had not discussed the matter with the Australian government.

China’s ambassador to Canberra criticised on Sunday Prime Minister Anthony Albanese’s election pledge last month to return the strategically located northern port to local ownership.

The Northern Territory government sold the port’s 99-year lease to Landbridge for $506 million in 2015, a move criticised by the U.S. president at the time, Barack Obama. Around 2,000 U.S. Marines conduct exercises for six months of the year in the northern city of Darwin, where the U.S. and Australia are expanding air bases to host U.S. bombers.

The Australian newspaper first reported on Tuesday that Cerberus Capital Management, founded by billionaire investor Stephen Feinberg who was appointed U.S. deputy secretary of defence in March, was preparing a formal proposal to buy the port.

“The Chinese enterprise concerned obtained the lease of Darwin Port through the market, and their legitimate rights and interests should be fully protected,” Chinese foreign ministry spokesperson Mao Ning said on Tuesday at a regular press conference, replying to a question about Darwin Port.

The Australian federal government is running a separate process to identify potential Australian buyers and investors for the port.

“There have been numerous meetings with potential proponents for the Port of Darwin,” said federal lawmaker Luke Gosling, the special envoy for defence and Northern Australia, in a statement to Reuters.

“We’ll work through that process methodically,” he added.

The Northern Territory’s treasurer Bill Yan told parliament last week the port must be ready for “heavier defence logistics, the surge in critical mineral exports and the growing LNG cargoes”, and operate in “Australian interests”.

Yan’s office did not respond to a request for comment.

Australian Strategic Policy Institute director of national security programs, John Coyne, said Landbridge deciding to sell the port for profit would be an easier pathway for the Albanese government than if it were required to intervene to break the lease on national security grounds, which would draw a backlash from China.

“Beijing would not be happy with a divestment of an asset like this,” he said, adding China could discourage other foreign investment in Australia.

Source: Reuters