Chinese Consortium Buys Largest Shipping Container Terminal in Turkey, Located near the Crossroads of Beijing‘۪s ‘‘‘One Belt‘ and ‘‘‘One Road‘ Initiatives
On September 16, 2015, a joint venture (JV) of three Chinese state-owned enterprises (SOEs) ‘‘‘ the China Ocean Shipping Company (COSCO), China Merchants Group and the China Investment Corporation (CIC) ‘‘‘ took control of Turkey‘s largest container terminal in Turkey, the Kumport Terminal, by purchasing a 64.5% stake in Fina Lima for $920 million. Fina Lima, in turn, owns 98.7% of the Kumport Terminal, which is located at the Ambarli Port in Istanbul (the largest container shipping port in Turkey). Since June 2015, the Chinese JV has been waiting on approval of this purchase by the other leading shareholder of Final Lima, the Oman State Fund (which owns the remaining 35.5% stake in the company). In a separate deal, the Chinese JV purchased the remaining 1.3% stake of Kumport Terminal, giving the two shareholders of Fina Lima (i.e., the Chinese JV and Oman State Fund) total control.
Kumport consists of a six-berth terminal that is able to handle 18,000 twenty-foot equivalent unit (teu) vessels. The terminal has a current capacity of 1.84 million teu and the potential for expansion up to 3.5 million teu (which would make it one of the top fifty in the world by volume).
The Kumport Terminal comes as China is also working to gain control of the Piraeus Port in Greece, both of which have relevance to the new Silk Road initiative being pursued by China. China‘s COSCO is one of the main contenders for taking a 51% stake in the Greek port, bidding against AMP Terminals Maersk and ICTSI. COSCO, however, already controls the Piraeus Container Terminal, in which it has invested some $384 million over the past four years. These expansion activities raise the distinct possibility that COSCO and its partners in the JV will demonstrate the same kind of ambition at Kumport (due to the similarly strategic nature of that location).
The purchase of the Kumport terminal and China‘s activities in Greece demonstrate Beijing‘s desire to control important shipping and transportation nodes along its Silk Road route from Asia to Europe. By controlling these facilities, China can ensure the movement of its goods at the lowest cost and with the greatest reliability. The strategic significance of Kumport is enhanced by its position at the crossroads between the land and sea routes of its Silk Road strategy (i.e., ‘‘‘One Belt‘‘_‘ and ‘‘‘One Road‘).