Clive Palmer blames Beijing for nickel refinery woes

The viability of Clive Palmer’s major business, a nickel refinery, is in doubt.

Citic used a trading update yesterday to disclose to the market in Hong Kong that Clive Palmer had launched a new legal action in Brisbane. Picture: AAP

The viability of Clive Palmer’s major business, a nickel refinery, is in doubt following revelations he is blaming the Chinese for his ­inability to pay for major machinery upgrades, amid a cash crunch and nickel price collapse in the ­ongoing commodities rout.

The Palmer United Party ­leader has filed a new legal case in which he has levelled claims of “unconscionable conduct” against China’s top business leader, Chang Zhenming, along with other ­Chinese and Australian ­executives of the Beijing-owned global giant Citic.

The federal parliamentarian’s nickel interests are likely to have been hit by the sharp fall in the price of nickel, which has been slashed by half over the past year.

His flagship company, Mineralogy, is almost two years overdue in filing its financial accounts with the Australian Securities & Investments Commission.

Mr Palmer’s other prominent business, a Sunshine Coast resort and dinosaur park that has shed more than 600 staff, has been closed to overnight guests.

Citic, China’s biggest conglomerate, used a trading update yesterday to disclose to the market in Hong Kong that Mr Palmer had launched a new legal action in Brisbane.

In it Mr Palmer claims that the non-payment by Beijing’s overseas investment company of ­royalties for the production of iron ore from the tycoon’s ­tenements in Western Australia “amounted to unconscionable conduct” under Australian consumer law.

According to Mr Palmer, Mineralogy “intended to ­advance the sum of $120 million” to his other company, Queensland Nickel, to perform major conversions of critical machinery at his Townsville refinery.

Mr Palmer’s new legal case ­alleges that, as a result of the non-payment of iron ore royalties by Citic, Mineralogy had not made the advance of the $120m to the refinery.

Mr Palmer’s Queensland Nickel is now claiming damages on the basis that, if the upgrades — “roaster fuel conversions” — had been made, they “would have given rise to cost savings of approximately $137.5m to date and future cost savings of $96m per year”.

Mr Palmer, who was last week filmed dancing in a rabbit costume and smearing peanut butter on the face and chest of a man wearing a Tony Abbott mask, has previously described his wealth as being in the “billions”.

Citic said in its regulatory filing in Hong Kong: “These matters are ongoing. The group intends to contest all existing legal proceedings, and any future claims, vigorously. There have been no entries made to the (company) accounts in relation to these matters.”

The new legal action was started last Friday, but was “not yet served on the defendants” — headed by Citic’s chairman, Mr Chang.

Mr Palmer’s ageing nickel refinery has been plagued by environmental issues, including spills of toxic sludge from its tailings ponds into waterways and the Great Barrier Reef Marine Park. The workforce at the refinery has been trimmed to about 600 and maintenance budgets have been cut.

In the past 12 months, the price of nickel has been cut in half to about $US4.40 a pound from $US9 a pound in August last year, and a high of $US13 in early 2011 in the months after the mining giant BHP Billiton effectively gave the refinery to Mr Palmer in 2010.

In a confidential legal letter leaked to The Australian, Mr Palmer warned the Chinese in March 2013 that “the livelihood of over 1000 employees (of his) group and associated companies depends upon” receiving an ­urgent payment from Citic.

He issued a veiled warning at the time to the Chinese political leadership that a corporate collapse of his companies with the resulting job losses would do ­“irreparable damage to the goodwill” between China and Australia.

Mr Palmer also stated in a sworn affidavit in April, 2013: “I purchased the (nickel) refinery in the expectation that if it continued to run at a loss it could be funded as necessary from royalties received from (the iron ore project).”

A Queensland Nickel source said yesterday the refinery’s roasters, which are 12 storeys high, ran on oil but Mr Palmer wanted them converted to gas to save money.