Clive Palmer nickel refinery firm not licensed

Clive Palmer’s Queensland Nickel Sales Pty Ltd has no valid environmental authority to run the major hazard facility.

Clive Palmer on the Gold Coast. Picture: Lyndon Mechielsen

Clive Palmer’s company specifically put forward to operate his cash-strapped nickel refinery, Queensland Nickel Sales Pty Ltd, has neither valid environmental authority nor a licence to run the major hazard facility.

The Australian can reveal the company’s lack of a licence as the federal member for Fairfax ­finesses a last-minute bid to avoid paying about $100 million owed to creditors by a different company, his Queensland ­Nickel Pty Ltd, which is under ­administration and holds the ­environmental authority.

It is one of several hurdles he will have to overcome, including convincing the refinery’s existing 550 staff to agree to work for the new company, signing fresh contracts with disgruntled suppliers — many of whom are owed money — and shelling out millions of dollars for overdue maintenance at the plant.

Mr Palmer says he has ­secured $23m in conditional ­finance from an unknown Sydney financier, borrowed against his personal assets and the ­refinery, but it is unlikely to last long, given it costs about $28m a month to run the plant. The ­operation can bring in $50m in revenue during an average month, depending on the nickel price, which is rallying but still historically low.

The Queensland government is prosecuting Mr Palmer’s company for environmental breaches, having repeatedly put the tycoon and his business on notice for a poor record with spills of toxic sludge from the refinery’s tailings dams near the Great Barrier Reef Marine Park.

It is an offence to operate the refinery without an environmental authority.

The removal from operations of Queensland Nickel means a new authority will need to be ­approved. Under the Environmental Protection Act, Mr Palmer’s new company faces the risk of being rejected as a suitable operator “having regard to the applicant’s environmental record”.

A spokesman for the ­Environment Department said that in most circumstances where a new company took over operations, the existing authority could be transferred after a registration process that determined fitness and suitability.

“There is also an option for the new operator to apply for a new EA if that is their preference,’’ the spokesman said.

“The Department of Environment is yet to receive an application regarding Queensland Nickel’s EA, but it has been in contact with the administrators about this issue.”

A transfer could be “undertaken without delay”.

A production ban was imposed temporarily two years ago after inspectors from the Environment Department were concerned that massive volumes of carcinogenic contaminants, the hazardous byproducts of the processing of nickel and cobalt, were spilling from the dams despite repeated warnings to Mr Palmer to spend money on upgrades.

The current prosecution of Queensland Nickel Pty Ltd over breaches due to the spills was launched early last year and is to be set down for trial after the case returns to court next month.

On Monday, Mr Palmer blindsided Queensland Nickel’s voluntary administrators when he replaced the company as manager of the nickel refinery with Queensland Nickel Sales.

The move drove former Queensland Nickel internal auditor Doug Dunstan to write to ASIC commissioner John Price urging the watchdog to investigate possible phoenix activity.

“This replacement company Queensland Nickel Sales Pty Ltd has in my view unleashed a phoenix activity of monumental proportion,” Mr Dunstan wrote.

An ASIC spokesman said the watchdog was waiting for two ­reports from administrators FTI Consulting, due next month, which will reveal whether possible offences have been uncovered, warranting an investigation.

University of Technology Sydney associate professor in corporate and insolvency law Jason Harris said the actions of Mr Palmer’s companies did not appear to be phoenix activity.

“It seems like Queensland Nickel was the joint venture ­manager; there’s nothing unusual about replacing a JV manager, particularly if they go bust … that doesn’t mean it’s a phoenix or ­trying to prejudice creditors,” ­Associate Professor Harris told The Australian. “The original company never had the assets so there is no asset stripping as you see in most illegal phoenix ­situations.”

The main asset is the refinery itself, which is owned by the manager’s parent companies, also controlled by Mr Palmer.

A source close to the refinery confirmed the new manager would have to spend millions in coming months to fix a “myriad” of maintenance problems at the plant.

The refinery’s former safety representative Ian Mawhirt, a technician and AWU delegate, told The Australian a failure to spend money on maintenance had a widespread impact and raised the environmental risk.

“The people are sick of working with machinery that continually breaks down with no parts or money available,’’ he said.

“They are reporting the whole system is a mess of broken-down machinery and no parts or chemicals.”