11 November 2015
by Gabriela Motroc
Clive Palmer’s business group allegedly in deep water
It appears that 2015 may not be businessman-turned-politician Clive Palmer’s year.
According to a document signed by Clive Palmer, the owner of Mineralogy, and leaked to The Weekend Australian in early November, the businessman seeks an infusion of $2 million AUD in cash as quickly as possible. The director of Coeur de Lion Investments wants the cash in two tranches, of $1.2 million AUD and $800,000 AUD and demands the removal of the current directors from the controlling entity for the villas at the former Hyatt resort, now named the Palmer Coolum Resort, the appointment of new directors, the surrender of certain leases and the interruption of all litigation.
Although more control may help Palmer at the resort which remains closed for business [apart from golf], The Weekend Australian cited insiders as saying that it is the $2 million AUD the businessman-turned-entrepreneur needs the most. According to Inquirer, the financial strength of Palmer’s business group is shrinking.
Not long ago, Palmer tweeted “We need to do more to stop struggling Australian businesses going to the wall.” Although the entrepreneur denied rumours which claimed he requested an injection of capital for his nickel refinery, there are two possible signs that Palmer’s finances are running low. First, The Palmer Coolum Resort announced earlier this year that the accommodation and conference facilities were closed for extensive refurbishment, with only one restaurant and the golf course remaining open. Second, Clive Palmer’s mining company Mineralogy has lost the court battle with Citic, its estranged Chinese joint venture partner over a Western Australia iron ore export port.
The Cape Preston port is the export point for iron ore from the Sino Iron project, which failed to begin production as it was initially scheduled due to a big cost blow-out. Palmer’s company wanted to adjourn Citic’s right to continue using the $8 billion AUD- plus port after the state-owned enterprise built it. Mineralogy claimed Citic should not have exclusive control of the facility and that there had been a breach of an agreement between the two companies. Palmer’s company judged it should have the ultimate right to operate the port because it owned the mining tenements which constitute the Sino Iron project, Australian Associated Press reported.
Federal Court of Australia Justice James Edelman dismissed Mineralogy’s claims and eventually ruled in favour of Citic. Justice Edelman said Mineralogy had confirmed five years ago, after China’s Citic had spent $6 billion AUD on the Sino Iron project that it did not intend to get involved in the operations, but “changed its mind” a couple of years later. “Apart from the mere act of defending these proceedings,” the only act which Palmer’s company claimed to constitute the breach by the Chinese company parties was a paragraph in a three-page letter to Mineralogy’s solicitors, Justice Edelman ruled.
Palmer’s Mineralogy had claimed in the first termination notice that Citic had committed a “serious breach,” but the supposedly “offending paragraph” only said that the rules attached to the Facilities Deeds were not accepted by the relevant government agencies of West Australia’s state.
Justice Edelman also criticised the way Mineralogy had handled the case and judged that “when there are billions of dollars at stake” there can sometimes be a regrettable proneness to try to raise “any and every issue that might be thought to be arguable.” He was also critical of the fact that the case had been constantly shifting. Mineralogy tried a number of times to change its case during trial, “often in major respects,” and sometimes without any effort to rectify its pleading. Justice Edelman said that even as late as the last day of trial, Palmer’s company was trying to amend four of its five grounds of relief, even after millions of dollars had been spent on the litigation.
As far as Coolum Resort is concerned, Palmer promised in 2011 to spend $2 billion AUD to transform the property and create a high-rise beach hotel, casino and theme park. However, his plans have yet to materialise and the attractions have done little to fill hotel rooms. Four months ago, the owner of Mineralogy fuelled speculation he might sell the resort by touring a group of Asian businessmen through the property.
Sources told the Courier-Mail earlier this year that the businessman-turned-politician’s mining cash flow is the main problem which prevents the revamp of Coolum Resort from happening. Palmer’s business empire has been affected by a plunge in iron prices and the legal battle with Citic over royalties.