Clive Palmer lifeline at risk over $22m bill battle

Clive Palmer faces the loss of iron ore tenements in WA because of his refusal to pay a $22m bill.

Clive Palmer in Brisbane yesterday. Picture: Lyndon Mechielsen

Clive Palmer faces the loss of his most valuable asset and source of future significant revenue, iron ore tenements in Western Australia, because of his refusal to pay a $22 million bill.

The Weekend Australian can reveal that the federal member for Fairfax signed a guarantee as a director of Mineralogy Pty Ltd, his flagship company, to pay the bills of a Singaporean company he hired five years ago to survey the seabed off Papua New Guinea for oil and gas.

The little-known guarantee that was signed by Mr Palmer when he hired the Singaporean company means that Mineralogy, which holds the mining rights for the iron ore tenements in the Pilbara region near Karratha, is set to be pursued next.

Mr Palmer’s company, Palmer Petroleum Pty Ltd, which entered into the original contract with the Singaporeans, has no serious ­assets apart from the near-worthless petroleum exploration licences off PNG.

Mr Palmer’s iron ore tenements are his most important and lucrative assets, despite his failure to receive major royalties from the Chinese government-owned Citic Pacific, which has spent $10 billion developing its mining project based on the tenements.

Documents filed in Western Australia’s Supreme Court show that Mr Palmer anticipated a royalty stream of $400m a year, payable to Mineralogy.

The tycoon and the Chinese have been locked in litigation over the royalty dispute and other matters, leaving his companies cash-starved and contributing to the collapse of his nickel refinery in Townsville, his resort in Coolum, the loss of about 1500 jobs and a sell-off of assets.

A legislated State Agreement in Western Australia sets out requirements of Mr Palmer’s Mineralogy and the interests of the Colin Barnett-led state government in the iron ore project. An insolvency event for Mineralogy will trigger its removal from the agreement and the forfeit of the mining rights.

Since 2013, Mr Palmer has refused to pay invoices amounting to $US16.72m from the Singaporean company BGP GeoExplorer, following its comprehensive 3D seismic surveying program with custom-built vessels, geological experts and crew.

Shortly before the 2013 federal election, Mr Palmer claimed that 3D seismic surveys showed he was holding “potentially one of the world’s largest” gas reserves, rivalling the North West Shelf. He said it was worth more than $US35bn.

In an affidavit three months ago, he said he was dis­appointed the survey data provided by the Singaporean company did not indicate a huge reserve of gas or oil. He said he suspected the company wrongly understated the resource as it wanted to take it for the benefit of China’s government.

Supreme Court judge David Boddice earlier this month rejected Mr Palmer’s bid to set aside the Singaporean company’s statutory demand to be paid for its work.