Clive Palmer’s funding cuts ‘made Queensland Nickel hazardous’

Clive Palmer’s nickel refinery was unsafe in several areas because of funding cuts by the tycoon.

Clive Palmer's Queensland Nickel refinery in Townsville. Picture: Brian Cassey

Clive Palmer’s nickel refinery, a “major hazard facility” because of its dangerous gases and toxic contaminants, was unsafe in several areas and posed an ongoing environmental risk because of funding cuts by the tycoon.

A forensic examination of Queensland Nickel’s accounts showed that Mr Palmer siphoned refinery money at the expense of critical maintenance. There were “safety noncompliance” issues, dozens of outstanding maintenance jobs, and more than 800 “critical” inspections overdue when voluntary administrators were appointed to QN in January.

The administrators were told by senior staff and managers that “plant and equipment was often required to operate outside standard risk parameters”.

Spare parts were not available and funds were not allocated to rectify problems “as it had been considered cost-prohibitive” by Mr Palmer, who was in charge of spending, according to the report of the administrators.

A formal risk measurement used at the refinery to “demonstrate failure of a critical control in place to prevent a major incident from eventuating” showed that the number had blown out to about 80 in February, well beyond the target of no more than 10 exceptions.

“At the time of our appointment, there were in excess of 1000 critical inspections of plant and equipment within the refinery identified for action, with over 800 such inspections being overdue,’’ the report stated.

Ongoing plant safety concerns were compounded by staff cuts in maintenance, safety, environment and elsewhere.

Inspections and audits by Queensland’s Hazardous Industries and Chemicals Branch last year and in January led to more than 100 shortcomings being identified, many of which remained outstanding when administrators came on board.

“The capital expenditure on basic things such as repairs and maintenance was certainly very much under what was required, in our perspective, to operate the refinery in a safe capacity,” said John Park, of FTI Consulting. “At a very high level, as a result of the cashflow squeeze from various other businesses in the broader Palmer empire, funding … was becoming critical over those months in 2015.”

In the past three years, QN spent $39m a year on maintenance on average, compared with $80m spent by BHP each year in the three years to 2009 when Mr Palmer took over the plant.

The administrators found that an exhaust stack at the refinery was “in a critical condition” and at risk of collapse.

Many of the environmental problems related to toxic sludge spills from the refinery’s tailings dams, near wetlands adjacent to the Great Barrier Reef Marine Park near Townsville.

The refinery is being prosecuted for the spills.

A high-level federal government document, disclosed under Freedom of Information laws in 2014 and first reported in The Australian, revealed that the refinery posed a serious environmental threat, with ­nitrogen concentrations in its ponds more than 150 times the maximum for sewage discharge in the marine park.