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DP World pushes ahead with London Gateway port project, aims for opening by Q4 2013
DUBAI, United Arab Emirates (AP) ' DP World, the Dubai port operator building Britain's first deep-sea container port in more than a quarter century, vowed Tuesday to open the new cargo hub outside London by the end of 2013.
The London Gateway project represents a big bet on Britain for DP World as questions swirl about the health of Europe's economy and the outlook for the global shipping industry. Still, executives insist the time is right to push ahead.
"Investment in ports and logistics is always a long term investment," the firm's chairman, Sultan Ahmed bin Sulayem, told reporters. "We believe the demand is going to be there, definitely. ... The UK needs it."
DP World is the world's third largest seaport operator, with interests in cargo terminals on six continents. The company said it plans to pump another $1 billion into the project over the next three years, on top of some $600 million previously invested. It will pay for the work using cash on hand and loans already lined up, bin Sulayem said.
The facility is located about 25 miles east of central London.
Getting the first stage of the terminal up and running should create 700 construction and 300 port jobs in the coming months, DP World said. It estimates the facility will generate tens of thousands more jobs over the long term.
"It will help Britain to maintain its competitiveness, drive productivity, and crucially strengthen our links with Asia and beyond," British Business Secretary Vince Cable said in a statement.
DP World began preliminary work on the London Gateway site in 2008, just as the global economy was turning sour.
By 2009, the company's corporate parent, state conglomerate Dubai World, was struggling to repay tens of billions of dollars in debt. DP World said at the time that many of its overseas projects, including London Gateway, were under review.
Development of the port picked up again in 2010.
London Gateway will initially have the ability to lift the equivalent of 1.6 million standard shipping containers per year when it opens in the fourth quarter of 2013.
Over time, DP World expects to expand capacity to 3.5 million containers annually. That would put it on a similar scale to Felixstowe in southeast England, which is already Britain's largest container port.
Samir Murad, an analyst at NBK Capital in Kuwait, predicted the expansion to full capacity could be at least five years away for now. But he said moving forward with the first stage of the port now makes sense, despite the difficult economy.
"It's better to build during downturns. This way you participate fully in the recovery," he said.
DP World, seen as one of Dubai's core state-controlled companies, launched a secondary listing for its shares on the London Stock Exchange in June in a bid to attract a wider range of shareholders. Its stock also trades on the Nasdaq Dubai.
In August, the company posted a first-half profit of $740.9 million but cautioned that the outlook for the second half of the year remains foggy amid concerns about a global slowdown.