Nassim Khadem Reporter

Nassim covers the accounting and tax rounds for BRW, as well as general business news. She previously worked for The Age newspaper covering general news, state politics and economics.

View more articles from Nassim Khadem

Clive Palmer disputes ‘beat-up’ about Queensland Nickel’s future

Published 17 June 2013 12:10, Updated 18 June 2013 08:52

+font -font print
Clive Palmer disputes ‘beat-up’ about Queensland Nickel’s future

Clive Palmer might be busy on the election hustings, but questions are being raised about his business empire. Photo: Justin McManus

Clive Palmer, Australia’s would-be prime minister, has been touring the country fielding candidates for his Palmer United Party, and promising to create jobs.

But there may be questions about his own business dealings, after the The Australian newspaper published the contents of a leaked document in which Palmer has allegedly written to a Chinese creditor urging the payment of some $200 million he is apparently owed.

In this document Palmer is reported to have said “the livelihood of over 1000 employees [of his] group and associated companies depends upon” receiving an urgent payment from CITIC Pacific, the company mining one of his Western Australian mining deposits, which has close ties with China’s political leadership.

Palmer has accused the The Australian of “running a beat-up” and said his Yabulu nickel refinery in Townsville, which he bought from BHP in 2009, is still open and in good shape.

Palmer’s PR spokesman Andrew Crook this morning released a statement quoting Queensland Nickel’s managing director Ian Ferguson saying the “newspaper’s callous attacks on Clive Palmer and claims about the future of Queensland Nickel are totally unacceptable”.

Palmer runs a number of businesses through his head company Mineralogy. The refinery and the Palmer Coolum Resort – formerly called the Hyatt Coolum Resort, which he bought three years ago for $80 million – are believed to be making losses.

Companies hit by lower commodity prices

Palmer’s fortunes on the BRW Rich List have dived more than $1 billion over the past year. As with most others making their money in the resource sector, Palmer has been stung by the fall in commodity prices. He was valued on this year’s list at $2.2 billion.

Still, Palmer claims these businesses are holding up. He says he earns millions a year in royalties from his mining interests and these are used as cash reserves for his other businesses.

“Palmer has used his personal wealth to cover recent operating losses at Queensland Nickel as a result of the lower global nickel prices,” said Ferguson in a statement released by Andrew Crook.

“These actions have protected the livelihoods of almost 1000 workers and their families and shows Mr Palmer’s level of commitment to the people of Townsville. He does not deserve to be ridiculed by The Australian.”

The newspaper report says Palmer’s claims that he is collecting money from his royalties are contradicted by the document and by CITIC Pacific’s corporate filings. The report says the document states Palmer “has not received any substantial payments at all under the [mining rights site lease agreements] over the last seven years”.

In it, Palmer also reportedly says the combined 1000 staff of the refinery and resort were under threat if CITIC did not pay up: “If the loss of employment to over 1000 Australian families results from [CITIC] failing to honour their obligations to Australian companies, it will do irreparable damage to the goodwill between the respective parties and between Australia and China’s relations.”

Attack on The Australian

But the statement from Ferguson this morning attacked the News Corporation owned publication. “The Australian and its owners are not accountable to the standards they impose on others,” it said.

“Over recent years News Corp has dismissed hundreds of employees in Australia. In the last week alone, two senior executives at News’s Queensland operations were dismissed.”

It said the reason The Australian attacked Clive Palmer “is a result of News Corp promising Tony Abbott that he will be the next Prime Minister”.

“This appalling attitude reflects what is wrong with Australian politics and the Australian media,” Ferguson says in the statement. “It is the manipulation of the few against the rights of the many. It sadly shows the lengths that certain powerful individuals will take to stop the rights of the people to choose.”

The Chinese have faced lower margins on the Sino Iron project than initially expected. Palmer’s head company, Mineralogy, holds an estimated 160 billion tonnes of magnetite iron ore deposits in the Pilbara, and CITIC has negotiated two sub-leases giving it the right to mine 6 billion tonnes.

CITIC Pacific has plunged $7 billion into the Pilbara project to develop magnetite iron ore reserves, which are extremely costly to mine and yet to be shipped out of Australia. Magnetite iron ore has to be upgraded before being shipped, making it more costly to produce than haematite, which is mined by BHP Billiton and Rio Tinto.

In May, Palmer won a multimillion-dollar court battle with CITIC Pacific over a contract defining the timing of mining royalties. It stated that a royalty must be paid when the ore is “taken”.

In a West Australian Supreme Court ruling last month, Justice James Edelman found in favour of Palmer on the definition of “taken”, meaning CITIC now owes him $400,000 of royalty payments dating back to 2008. Palmer was proven right in saying “taken” means when you mine it and put it onto a stock pile, despite CITIC claiming this meant when iron ore passed through primary crushing

Palmer claims he is sustaining losses at the nickel refinery operation from $500 million in royalties from the Chinese. He told reporters in Melbourne yesterday: “I have enough money to keep it [the refinery] open for the next 10 years, there’s no problem about that and I am strongly committed to that.”

Topics:

Comments