Clive Palmer in peril as court and banks baulk at lifeline

Clive Palmer’s teetering business empire could come crashing down as early as today.

Clive Mensink and Clive Palmer leave through the back door of the Supreme Court in Perth

Clive Palmer’s teetering business empire could come crashing down as early as today, with the federal MP warning he will be forced to put his Queensland Nickel ­refinery into administration and sack ­almost 800 workers.

Mr Palmer last night failed in an urgent bid to win funding from his estranged Chinese business partners to keep the Townsville ­refinery afloat.

The West Australian Supreme Court was told Mr Palmer would take the drastic action to close the business unless the Chinese government-owned Citic was ordered to pay $US48 million ($66m) by last night. Judge Paul Tottle ruled Citic did not have to pay the money and cast doubt on whether Queensland Nickel had exhausted all avenues to avoid collapse.

In an extraordinary day, Mr Palmer looked on in court as his lawyers detailed the severe financial pressures within the federal MP’s various businesses.

While the financial difficulties of Queensland Nickel had already been flagged, Mr Palmer’s lawyer, Simon Couper QC, revealed that Mr Palmer’s flagship company Mineralogy was struggling to pay its legal bills and could lose two key Queensland coal projects by failing to meet minimum spending ­requirements.

The court heard that five Australian banks knocked back Mr Palmer for loans to keep his Queensland Nickel refinery afloat, despite the company’s ­official accounts valuing its assets at $1.9 billion and its debts at just $23m. Commonwealth Bank, Westpac, ANZ, NAB and Suncorp refused to lend money to the struggling refinery, Mr Couper said.

Lawyers for Citic produced evidence from one of the banks, in which the institution recom­mended Mr Palmer step in to provide funding to the refinery.

Mr Palmer was seeking the payment as part of a long-running dispute with Citic over royalty payments at the massive Sino Iron project in the Pilbara.

Mr Couper described Mr Palmer’s business empire as being in a “worse than perilous” financial position. He said unless the court ordered Citic to pay $US48m, there would be major ramifications for Mr Palmer and his business interests.

The Townsville refinery employs 776 people whose jobs could all disappear if the refinery is shut down and Queensland Nickel goes into administration.

Mr Couper noted that the ­financial woes extended beyond Queensland Nickel to Mineralogy and its coal subsidiaries Waratah Coal and Fairway Coal. “If money is not paid, Queensland Nickel’s position is worse than perilous and Mineralogy’s prospects of continuing litigation and maintaining valuable assets in its subsidiaries are seriously at risk, to say the least,” he said.

While Mr Palmer has described himself as a billionaire, the court heard Mineralogy brought in just $4m in revenue last year against spending of $29m. The company also had just $491,899 in cash to its name at June 30.

The lawyer representing Citic, Charles Scerri QC, said it was an “absurd proposition” that Citic should pay money to keep Queensland Nickel afloat given it was unrelated to the dispute ­between Citic and Mineralogy.

Mr Scerri noted that Citic had paid Mr Palmer $US415m in 2006 so he should have been in a position to support Queensland ­Nickel if he wanted. “The only reason we are talking about Queensland Nickel is because the only shareholder of Queensland Nickel (Mr Palmer) has chosen not to support it and wants Citic to support it instead,” Mr Scerri said.

Citic and Mineralogy have been in dispute over how to calculate a royalty payable to Mineralogy from Citic’s Sino Iron project. The formula relied on the now-defunct annual benchmark iron ore pricing mechanism.

In his judgment, Justice Tottle said there appeared to have been little effort made by Mr Palmer or Queensland Nickel managing ­director Clive Mensink, his nephew, to resolve its financial difficulties other than launching yesterday’s court proceedings.

“This is surprising given QN’s long trading history, its strong balance sheet and its important position within the Queensland economy and society,” Justice Tottle said.

“I am not satisfied on the evidence that has been adduced that the stark alternatives — namely: grant the injunction or let QN suffer dire consequences — reflect an assessment of all options that one would expect to be considered when a major business is experiencing financial difficulties.”

Speaking outside the court, a Citic spokesman said the company’s thoughts were with the Queensland Nickel workers but noted the company had paid hundreds of millions of dollars to Mr Palmer and Mineralogy.

“It’s our view that how Mr Palmer chooses to spend this money and how he chooses to manage his other ventures — whether it’s golf courses, nickel mines, soccer teams, the Titanic 2 or robotic dinosaurs — is a matter for him,” the spokesman said.

Mr Scerri said the case raised questions about the likelihood of survival of not only Queensland Nickel but also Mineralogy. If Citic had been ordered to pay interim funds to Mineralogy, Mr Scerri said there was little hope of them ever being paid back.