Clive Palmer's toxic dam at risk of overflow

A VAST dam storing contaminated water produced by Clive Palmer's Townsville nickel refinery is operating outside spill limits.

A VAST dam storing millions of litres of highly contaminated water produced by Clive Palmer's Townsville nickel refinery near the Great Barrier Reef is operating outside the regulatory "spill risk" limits due to a failure to increase its capacity.

A Department of Environment briefing note obtained by The Australian yesterday shows Mr Palmer's business has acknowledged it was required to do structural work to increase the capacity of the dam as part a program agreed with the regulator in January "to transition into compliance with the spill risk condition" by December 2.

The briefing note, prepared by senior officers of the department, shows that Mr Palmer's managers have admitted that, despite the requirement, "there is not sufficient time prior to the commencement of the 2013-14 wet season to carry out a lift to the (tailings storage facility)".

Monitoring has identified nickel, cobalt, cadmium, arsenic, ammonia, chromium, copper, manganese, mercury, aluminium, lead and silver in concentrations above Australian guidelines and which "would cause serious or material environmental harm" if they entered the surrounding environment, including wetlands.

Staff at the refinery, which has been hit hard by the departure of experienced managers, a slumping nickel price, costly operational decisions, cuts to ongoing maintenance and equipment breakdowns, were told to help Mr Palmer's political campaign in the federal election in September.

Mr Palmer's promise of a $1 billion upgrade to the refinery has not come to fruition. He has recently restructured his companies to pull ownership of his Sunshine Coast tourism resort and dinosaur park out of the nickel group, which lost almost $60 million in the financial year to June 30, 2012.

In a confidential affidavit sworn in April this year, Mr Palmer said: "The continued operation of the refinery, including the livelihood and employment of approximately 1000 employees and contractors, is dependent upon Mineralogy (his company) receiving royalties from (CITIC Pacific) . . ."

No royalties have been paid as CITIC disputes that Mr Palmer is owed hundreds of millions of dollars that he claims.

Mr Palmer's concerns over the refinery dam's spill-risk led to a major showdown, with the resources tycoon warning the Campbell Newman-led Liberal National Party government in June last year: "If we close it down and leave the dams there, they're going to burst and children are going to die. These are potential threats to human life. If we don't do something between now and the wet season, we are heading for disaster."

Mr Palmer wanted state and federal authorities to permit his company to release the contaminants into a nearby bay contained by the Great Barrier Reef protection zone. Mr Newman and federal environment regulators rejected this option. Mr Palmer said that the contaminants were cancer-causing and would spill into Townsville's waterways.

The production of tens of thousands of tonnes of nickel and more than 1000 tonnes of cobalt a year at the refinery results in the generation of numerous highly toxic contaminants.

The environmental clean-up cost of the refinery in the event of it collapsing due to unprofitability was estimated at more than $100m by its former owner, BHP Billiton, which passed on the responsibility by effectively giving the refinery to Mr Palmer in a sale in mid-2009.

The briefing note, which was updated three weeks ago, on October 16, reveals that onsite water management actions had reduced the amount of water in the dams by more than 30 per cent, "however, the spill risk of the tailings storage facility still exceeds the requirements of the Environmental Authority heading into the 2013-14 wet season".

The Queensland government's refusal to let Mr Palmer discharge the contaminants into the waters protected by the Great Barrier Reef was one of the triggers for his decision to cease donations to the LNP.

Mr Palmer's Waratah Coal was hit with an environmental protection order on Tuesday over the company's failure to rehabilitate almost 300 exploration holes in the Galilee Basin.

Mr Palmer, who has launched defamation proceedings in the Queensland Supreme Court against The Australian, did not respond to questions yesterday.