ǡ ʹͲͲ͹ Preparedby Inassociationwith: CBCLLimited BermelloAjamil&Partners,Inc. MartinAssociates Ports of Sydney Master Plan November 2007 EXECUTIVE SUMMARY A consortium of marine terminal owners and operators formed The Marine Group to plan the maritime future of Sydney Harbour. The ports community has come together to foster economic benefits to the region and to work towards common goals of increased port development and international shipping. The road map for this new direction is documented in the Ports of Sydney Master Plan (2007). THE MASTER PLAN REFLECTS LEADERSHIP OF THE MARINE GROUP The Marine Group consists of the following active members: x Laurentian Energy Corporation: Owners/Operators of Sydport Industrial Park x Logistec Stevedoring (Atlantic): Operators of International Coal Pier x Marine Atlantic: Crown Corporation – Operator of Newfoundland ferries x Nova Scotia Power: Owners of International Coal Pier x Provincial Energy Ventures: Operators of Atlantic Canada Bulk Terminal x Sydney Steel Company: Owners of Atlantic Canada Bulk Terminal x Sydney Ports Corporation: Operators of Sydney Marine Terminal GOALS ARE FOCUSED ON FUTURE GROWTH The Master Plan has been driven by targeting the achievement of the following interrelated goals: x Develop a consolidated vision for Sydney Harbour. x Identify opportunities for future growth and expansion. x Develop a Master Plan to capture opportunities. x Demonstrate the economic importance of the Harbour, both today and in the future. x Develop ways to better market Sydney Harbour to customers. PORTS OF SYDNEY ALREADY GENERATE SUBSTANTIAL ECONOMIC BENEFITS This Master Plan establishes for the first time, the economic impacts of the Ports of Sydney. Port activities within Sydney Harbour currently have substantial economic benefit to the region. The following provides evidence of the economic impacts of the Ports of Sydney that were derived from 2007 surveys of maritime employers and businesses1: • Marine Cargo Activities: • 2,125 Current Jobs (includes direct, indirect and induced jobs) • $57 million in Annual Tax Revenue to Region and Country – 1 Economic impacts and cost estimates in this Plan are Canadian dollars. TEC Inc. ES-1 Executive Summary Ports of Sydney Master Plan November 2007 – $34.9 million federal income tax – $20.7 million provincial taxes – $1.4 million local tax revenue • Cruise Activities: • 271 Current Jobs • $4.2 million Tax Revenue to Region and Country: • Total Ports Activities Today Generate: • 2,400 Jobs for the Region, and • $61 million in annual tax revenue SYDNEY IS A FREQUENT HOST TO CRUISE SHIPS Sydney has been a premier port of call for cruise ships and international tourists. The cruise market will continue to grow. In 2008, Sydney will host 86,000 cruise passengers on 51 cruise calls; a 76% increase over 2007. Three corporations dominate the cruise ship industry and all three are represented in Sydney. As of October 2007, 37 new cruise vessels are scheduled for delivery through 2012. Sydney’s strength is to serve as a port of call for the regional Canada & New England deployment patterns. Sydney competes directly with Charlottetown, PEI and Saint John, NB for cruise traffic and secondarily with Halifax. Growth is anticipated to be between 183,000 to 238,000-passengers in 2030. Cruise calls will range from 60 to 92 and Sydney will climb in peak day traffic on mid-week days from 2,918-passengers in 2008 to between 7,200 and 8,000-passengers in 2030. The cruise business will continue to be focused on the cruise passenger terminal in downtown Sydney. Sydney has one of the premiere multi-use cruise terminal facilities in Atlantic Canada. Expanding the tourism infrastructure and tourism offering overall is a key element in the overall delivery of Sydney as a cruise port of call. MARINE CARGO REPRESENTS STRONG POTENTIAL There are also strong cargo market opportunities for the Ports of Sydney. Ocean shipping routes are changing. Direct shipping from the Indian Sub-Continent to North America via the Suez Canal is faster and cheaper than going through West Coast North American ports. From the Indian Sub-Continent, the Suez Canal is the shortest distance routing to East Coast ports and equal distance to Chicago and Midwest destination as are routings via West Coast ports. Sydney Harbour represents the first port of call in North America for this Suez Canal vessel traffic. A state of the art container terminal in Sydney Harbour would take advantage of these shifts in ocean shipping routes and serve as a transfer hub with long haul rail movements of container cargo to the Midwest. With the potential resurgence of coal exportation from the region, the Ports of Sydney are also viable candidates to move millions of tons of this dry bulk cargo annually. Additionally, available marine terminal capacity exists within the Ports of Sydney to attract and handle increased volumes of traditional breakbulk and larger project cargoes for regional and various Great Lakes and Midwest markets. TEC Inc. ES-2 Executive Summary Ports of Sydney Master Plan November 2007 COMMERCIAL CARGO SHIPS ARE BIGGER AND SHIPPERS ARE FINDING FEW PORTS WITH POTENTIAL NEW SITES Commercial cargo vessels are larger and will only be able to be accommodated in a few ports with deep water harbours. The required draught of container vessels has grown from 10 meters (m) to 16 m that carry up to 12,000 twenty-foot equivalent units (TEUs) of containers. Coal carriers of 125,000 dead weight tons (DWT) that would be needed for a Sydney export market draw 16.5 m of water. Shippers are looking for certain assets in marine terminal locations. Ports no longer need to be located only in population centers. Available and adequate waterfront land for facility development and expansion are paramount in shipper choices for site location. Efficient rail transportation that will allow accessibility to distance customer markets and sufficient water depths to allow for the accommodation of planned vessel sizes are key decision criteria for port selection. THE PORTS OF SYDNEY ARE WELL POSITIONED Sydney is well positioned to capture these new cargo opportunities. The Ports of Sydney are the closest North American harbour to Europe through its proximity to the North American Great Circle Route. This fact positions Sydney well for receiving large cargo vessels using the Suez Canal and bringing products to North America. Marine terminals of the Ports of Sydney are all located within 10 kilometer (km) of the ocean in a very sheltered harbour with naturally deep water. There is available excellent rail connectivity that provides a strong competitive advantage for transferring cargoes to the Midwest and moving coal from potential recovered reserves in the region. Labor is readily available. And waterside land is available for increased utilization and new development with ample room for port expansion. DEEPENING A PORTION OF THE HARBOUR NAVIGATION CHANNEL IS CRITICAL TO THE EFFORTS TO ATTRACT POTENTIAL CARGOES The land and harbour conditions in Sydney are ideal for new terminal development; however, both the container and coal opportunities need to be able to accommodate larger vessels. The existing navigation channel, while having ample deep water in most locations of the harbour, has current water depth limitations of 11.5 m in the outer channel. Therefore, a key recommendation of this Master Plan is to deepen this 7.5 km long outer section of the navigation channel to a depth of 17 m. Navigational deepening is a common occurrence at ports today because of the increase in vessel size. The natural geology and hydrodynamics of Sydney Harbour limit sedimentation rates. High sedimentation rates in other ports force frequent maintenance dredging. It is anticipated that channel deepening of Sydney Harbour will not require costly and recurring maintenance dredging. This is another competitive advantage. It is estimated that approximately 4 million cubic meters of material will need to be excavated to reach 17 m throughout the outer navigation channel. Geotechnical studies indicate the much of this dredged material is sand and gravel with some silts that would be suitable for use in construction projects. An innovative use of this dredged material would be as TEC Inc. ES-3 Executive Summary Ports of Sydney Master Plan November 2007 fill material in the construction of new wharfs for the recommended container and expanded coal terminal of this Master Plan. This channel deepening and dredged material placement plan would be the subject of appropriate environmental study and permits. THE PORTS OF SYDNEY HAVE EXISTING ATTRIBUTES FOR INCREASED USE The Master Plan provides details of existing port assets and cargo or passenger business potential. It is important to note that the Ports of Sydney are independent entities and that each will follow their own business plans. However, this Master Plan provides guidance for potential development projects based on physical attributes and market forces. A summary is provided below. Potential for Development by Site and Cargo Type Facility/Site Container Bulk Breakbulk Other Existing Coal Restricted International Terminal can be space for breakbulk Restricted Coal Not Suitable expanded with new storage plus new space for other Pier berth and larger stock marginal wharf cargoes. plies required. Some limited potential, but berth Good site for bulk Limited for Autos, if length inadequate for Best Suited for Break shipments, currently coal piles are near. larger vessels and Bulk because of rail SYSCO/PEV loading coal and slag. Could serve as auxiliary shape of property and access and available Can be expanded for Passenger or Cruise rail access through open storage space. larger coal export Berth downtown limiting for containers Primary role as Marine Passenger terminal, can Not Suitable Not Suitable Secondary Atlantic handle some roll-roll cargo Some Potential to use Sydney Primary Passenger open space and Marine Not Suitable Not Suitable Terminal, serving adjacent site for Terminal cruise industry.