Nathan Tinkler ready to prove his critics wrong with shock return to coalmining
WRITE off the former Newcastle electrician at your peril.
NATHAN Tinkler is back and this time he says he has his hands “firmly on the wheel”.
Tinkler is a larger than life character who enjoys gambling, not only in sport but in business. From a young age he learnt to pick the coal market and he bought low and sold high, but he rolled the dice one too many times and suffered a spectacular downfall.
He admitted to The Weekend Australian this week that it had been a tough couple of years for him and lessons had been learnt, but he said what he had been through built character.
The former Newcastle electrician will be hoping he has the character to find value in Peabody Energy’s Wilkie Creek mine near Dalby, northwest of Brisbane.
He shocked the market this week when he revealed he had purchased the mine for $150 million. It had been shopped around for years and Tinkler first viewed it 18 months ago, when the price tag was up to $600m.
“Right now, I think we’re in a value part of the cycle,” he said.
“It’s tough coal prices at the moment, so it’s hard for any export mine to make a lot of money, but you have to believe in coal as a long-term part of the energy cycle and we believe it is.”
Tinkler, who once topped the BRW young rich list, has bet and won on the coal market previously and had runs on the board before the coal market collapsed last year.
His rise started at the age of 30, when he pulled together $1 million to purchase some NSW coal tenements, an interest he turned into a $400m-plus windfall two years later.
He then purchased the Maules Creek coal asset from Rio Tinto in 2009 for $480m, using debt. When he floated his resources vehicle, Aston Resources, just under a year later that project was valued by the market at about $2 billion.
Tinkler then sold 10 per cent of his Maules Creek project to Japan’s Itochu for $370m, which valued the asset at $3.75bn.
Then in December 2011 he merged Aston Resources into Whitehaven Coal, emerging with a 19.4 per cent stake that was valued at about $1bn at the time.
Three months after that deal with Whitehaven was finalised, he lobbed a $5.2bn takeover of the coalminer, which proved to be one deal too far for the young entrepreneur.
He had to walk away from that ambitious plan in August 2012 and he then turned on Whitehaven, complaining there was a “dearth” of mining experience on its board, so he attempted, and failed, to roll the board.
It was then clear the empire he had built was starting to dramatically fall because his move to roll the Whitehaven board was not supported by his own financial backers, Farallon Capital.
The state of his finances was laid bare in September 2012, when he was toppled from the top spot of the Young Rich list after losing $2m a day to take the record for the biggest wealth drop on the list.
Tinkler’s wide web of interests, including sport, infrastructure and mining, were all highly leveraged, mainly against the 19.4 per cent stake in Whitehaven he earned through the merger deal.
His debts were said to have reached about $700m by the end of 2012, with Farallon the main creditor and Credit Suisse and Kuok Group also money.
With rising debts, loan repayments due and a list of creditors taking him to court, he was forced to sell his stake in Whitehaven, which he did last year for around half the value it was worth when he first obtained it.
Tinkler then headed off to Singapore to live and, while those that know him always warned against betting against his comeback, his re-entry to the coal space surprised some.
Given the state of the thermal coal market, which is battling low prices, oversupply and high costs in Australia, conditions are prime for when Tinkler normally strikes. He has again managed to attract the backing of a serious player, Leucadia, a US-based equity firm that was an early supporter of Andrew Forrest’s Fortescue Metals.
The 38-year-old is confident he can have Wilkie Creek, which Peabody closed last year, back in production by the year end.
He believes his team can drive costs out of the business and operate it more efficiently as a smaller company.
And don’t expect him to lose control of this asset — each time he has flipped his prized assets before they have been developed. Tinkler told The Weekend Australian this week that he has his “hands firmly on the wheel this time and I’m not letting go of that”. He was forced to return to Sydney this week to front the Independent Commission Against Corruption.
ICAC has heard allegations that Mr Tinkler’s Buildev property development group donated $66,000 to a secret Liberal Party slush fund before the March 2011 state election.
The money was allegedly used to bankroll Newcastle Liberal MP Tim Owen’s successful election campaign.
Tinkler yesterday gave evidence to ICAC in typically defiant and taciturn style, denying any wrongdoing but seeming to accept that his payments to the Nationals were to curry favour.
“I am starting to see why this has been going on for three weeks,” he teased Geoffrey Watson SC, counsel assisting ICAC, following a series of questions on his donations to the Nationals.
“Your donation to the Nationals was a way of buying their support for your project?” Watson put to Tinkler.
“I think it would cost a bit more than $50,000 to build a coal loader and ensure approval,” Tinkler replied.
He went on to agree that “it was part of my thinking” that a donation to a political party would “get a hearing” for his cause, but said it was a “waste of money” in the end because he “didn’t get that hearing”.
Talking earlier this week, Tinkler admitted he had a tough time over the past couple of years and was sick of being the industry’s “whipping boy”, but said there were no prizes for giving up.
“The people who know me have stuck by me and my team have been very supportive and good to me,: he said.
“We have a strong record in the coal industry for identifying value and I think we’ve done it again here.”
If Tinkler’s fortune can rise again, and not falter, his story will be told among mining folklore.
ADDITIONAL REPORTING: LEO SHANAHAN