Hundreds of jobs at risk as Palmer’s nickel empire seeks bailout

Clive Palmer’s Queensland Nickel refinery is days away from collapse and more than 600 jobs are in the balance.

Clive Palmer speaking in the House of Representatives Chamber, Parliament House in Canberra.

Clive Palmer’s Queensland Nickel refinery is days away from collapse and more than 600 jobs are hanging in the balance unless the federal MP can secure $48 million from his estranged Chinese business partners.

The WA Supreme Court yesterday heard that Mr Palmer’s Queensland Nickel refinery near Townsville was in a “dire” financial position and would be unable to meet a critical payment by next Monday if Mr Palmer failed to win an order from the court for an ­interim payment from Chinese conglomerate Citic.

It was revealed yesterday that Clive Mensink, Mr Palmer’s ­nephew and a director of Mineralogy and Queensland Nickel, had met Townsville Mayor Jenny Hill last month to discuss potential job losses that would stem from the collapse of the refinery.

The revelations came as Mr Palmer’s private company Mineralogy renewed its push for the ­Supreme Court to hold an ­“urgent” trial aimed at winning a cash injection from Citic.

Citic and Mineralogy have been in a long-running legal battle over royalties from the $12 billion Sino Iron mine in Western Australia. Mineralogy is seeking an interim payment of some of the amount in dispute ahead of a full trial into the matter.

Supreme Court judge Paul Tottle yesterday agreed to hold a trial over the interim payment next Monday after Citic argued it would be “impossible” to prepare for a trial this week.

Mr Palmer’s lawyer, Simon Couper QC, told the court there would be unspecified consequences for Queensland Nickel if it was unable to make a payment by next Monday. “The material I have tells me that Monday is a day which matters in the future of Queensland Nickel,” Mr Couper said. “Tuesday or Wednesday may be too late. Somehow Mr Mensink might be able to hang on but I can’t make that submission with any confidence.”

Mr Couper intimated that Mr Mensink might be in danger of breaching his obligations as a company director if the matter dragged on. “Mr Mensink is in the difficult position in that he is a ­director of Queensland Nickel and has to be conscious of his exposure given the financial circumstances of the company,” he said.

Mineralogy has so far submitted 3300 pages of documents to the court in preparation for next week’s make-or-break trial, including two confidential affidavits from Mr Mensink and Queensland Nickel chief financial officer Daren Wolfe.

Citic’s lawyer Charles Scerri QC told the court those affidavits showed Queensland Nickel was in a “dire financial position” and Mr Mensink had spoken to Ms Hill about potential job losses.

Mr Scerri noted that Queensland Nickel was “a complete stranger” to the dispute over the Sino Iron royalty, which was being fought only by Citic and Mineralogy.

“It’s very regretful that Queensland Nickel is in an unfortunate financial position, but it has absolutely nothing to do with this case or these parties,” Mr Scerri said.

Mr Palmer’s Queensland Nickel business employs more than 600 people, according to Mineralogy, and has come under extreme pressure in the face of the lowest nickel prices in over a decade. The business, bought from BHP Billiton in 2009, reportedly held discussions with the Queensland government in October over government assistance, but the talks broke down and Mr Palmer vowed never to allow the company to borrow money from the state.

At the time, he talked up Queensland Nickel’s financial strength. “The simple fact of the matter is that there is no loan from the government or anyone else,” he said.

“I understand Queensland Nickel is debt-free and has net assets of over $1.9 billion, far more than The Australian and The Courier-Mail glued together.”

He said the company had revenue of more than $680m last year and was responsible for $1.3bn in economic activity in Townsville.

Since striking a landmark deal to sell two billion tonnes of Pilbara iron ore deposits to Citic in 2006 for $US415m, Mr Palmer has invested in a host of assets that now appear to be generating little to no income.

Mr Palmer shut the accommodation and conference facilities at his Coolum resort on Queensland’s Sunshine Coast earlier this year after his installation of robotic dinosaurs and a motor car museum at failed to arrest plummeting visitor numbers.

Two of his four private jets have been parked up on the tarmac at Brisbane Airport for a number of years, while a third — the Cessna Citation — has been put up for sale with an asking price of more than $7m.

Last month, The Australian revealed Mr Palmer siphoned off $1.35m in “loans” from the nearly insolvent Gladstone Pacific Nickel without consulting the group’s other shareholders.

Mr Palmer also had to repay more than $20m to Citic after taking money from a Citic port fund and using it to bankroll his party’s 2013 election campaign.