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Yacht captain James 'Jimmy' Blee, allegedly linked to dead cocaine diver, arrested trying to board international flight

James "Jimmy" Blee was arrested yesterday and faces extradition to NSW. (Supplied)

A veteran yacht captain arrested while trying to leave the country from North Queensland is linked to the discovery of $20 million worth of cocaine — and the death of a diver — in Newcastle, police allege.

Organised crime squad detectives have been investigating how the diver's body came to be found floating in the port of Newcastle on Monday, with 54kg of cocaine seized in and around a docked ship.

A manhunt was launched to find others suspected of involvement in the alleged large-scale drug importation attempt and, yesterday, 62-year-old James "Jimmy" Blee was arrested at Cairns Airport.

Queensland Police and Australian Federal Police officers stopped Mr Blee as he tried to board a plane to Singapore at about 5:30pm.

He was taken to Cairns Watch House where charges of importing a large quantity of a border-controlled drug and large commercial drug supply were laid.

Mr Blee is listed as the director of North Queensland Superyacht Marine, and claims to have decades of experience on the water.

Today, he appeared briefly before Cairns Magistrates Court, where NSW Police will apply for an extradition order.

The 62-year-old was remanded in custody and his extradition hearing was adjourned to the same court tomorrow.

Police divers searching beneath the cargo ship in Newcastle. (Supplied: NSW Police, AFP and ABF)

Back in Newcastle, police divers were preparing to again inspect the cargo ship at the centre of the alleged attempt to import up to 300kg of cocaine.

It is believed the drugs were strapped to, and stashed inside, the Areti GR Majuro, which arrived from Argentina on Sunday.

Police say 200kg of the drugs could still be still missing, and they think they've only found a "portion" of the full shipment so far.

Investigators also suspect the dead diver, who was wearing specialised scuba gear, had arrived in the country illegally.

Police said he was from South America.

Detective Superintendent Robert Critchlow said it appeared the man perished trying to retrieve the drugs and was "left to die" by accomplices who fled the scene.

It is not suggested Mr Blee was present.

Cocaine packages were taken into evidence by police at Newcastle after the diver's body was found in the water.  (Supplied: NSW Police)

Two smaller boats were reported in the area of the cargo ship on Sunday night, leading police to believe more people were involved.

"A small rubber ducky and a 5 metre aluminium Quintrex runabout with a green stripe was seen also near the ship," Detective Superintendent Critchlow said.

He described the alleged plot as "well-drilled" and "professional".

Home Affairs Minister Karen Andrews has furiously denied claims the Port of Newcastle doesn't have enough Australian Border Force (ABF) officers.

The sitting Labor member for Newcastle Sharon Claydon says ABF contingent at the port has been cut from 10 officers to six. 

Ms Andrews says that's untrue.

"Labor's claims that the border staff in Newcastle have been cut or that the ABF is not at capacity is an absolutely outrageous lie," she said.

"Border Force has come out and made that very clear."

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