07 March 2016
by Joshua Robertson
From rags to riches to rags in 12 years: the extraordinary story of Nathan Tinkler
Nathan Tinkler watching the Newcastle Jets football team in New South Wales
The prickly Australian tycoon’s fortunes were closely tied to the massive boom – and now bust – in coal and commodities.
It is a safe bet there will never be another Nathan Tinkler. A former apprentice electrician, Tinkler went from living with his parents to becoming Australia’s youngest ever billionaire – and, last week, going bankrupt. His extraordinary rise and fall took just 12 years, and neatly sums up an unprecedented mining and commodities boom that has now imploded.
Vast mining companies have been battered by the global slowdown, especially in China, and have written off billions from the value of their assets. In recent weeks mining shares have recovered a little, but BHP Billiton is still down from A$47 in 2011 to A$17 today and Anglo American has tumbled from £34 a share to just 558p over the same period.
And there have also been casualties among mining entrepreneurs – like Tinkler, who made a vast fortune from bold plays on two coal projects he kickstarted with just A$1m (£522,000) of his own money.
It was a fortune built entirely on speculation on the value of coal in the ground, and Tinkler squandered much of it on ill-fated forays into racehorses, sports teams and day trading, as well as the obligatory extravagances of the super-rich, such as private jets and luxury homes in three countries.
His prickly reputation among associates and journalists, however, robbed him of any working-class-hero status he might otherwise have enjoyed. He was dubbed “the boganaire” – bogan being the pejorative Australian term for a blue-collar character. More recently, Tinkler’s billionaire horseracing buddy, Gerry Harvey, said Tinkler was invariably loathed by those who met him because he behaved like an “arsehole”.
Tinkler now claims to have just A$2,000 (£1,000) to his name, and was last week bankrupted over a A$2.8m debt on a Dassault Falcon private jet that a former employee once said he “loved like a child”. That bill was among a string of debts, which range from a A$323,000 credit card bill to A$9.5m said to be owed to Harvey, A$11.5m to the taxman – and A$329m to global financiers.
Tinkler has swapped his luxury Singapore residence for a return to the Brisbane mansion owned by his ex-wife Rebecca, from whom he has borrowed A$50,000. His marriage was still intact when he paid A$5.2m for the mansion in 2007, which he acquired in his wife’s name. He is now living behind a locked gate and a sign warning of 24-hour security surveillance.
Tinkler’s first lucky play came in 2006 when he borrowed against everything he owned – including the couple’s more modest former abode – to pull together a A$1m deposit to buy the Middlemount coal deposit in central Queensland.
Tinkler, who ran a mining recruitment agency, had a less-than-promising record with money. He had previously lost the family home over missed mortgage payments, and a council he owed A$1,400 had once obtained a seizure order for Tinkler’s clothes dryer and TV.
But he sealed the Middlemount deal by bringing in investors, including Asia’s Noble Group, and just a year later Tinkler sold his Middlemount stake for A$275m to Macarthur Coal, with the payment made largely in shares.
Macarthur was run by self-described “humble coal miner” Ken Talbot, an earthy Brisbane character who became Tinkler’s mentor. In May 2008, Talbot played a guiding role in the timing of Tinkler’s sale of his Macarthur stake to Indian steelmaker Arcelor Mittal. That deal netted Tinkler A$442m – an unimaginable return on his A$1m punt two years earlier.
Tinkler wasted no time in plunging his money into planes, mansions, cars and a racehorse enterprise, Patinack Farms, on which he spent an estimated A$150m in its first year. Then came the global financial crisis and Tinkler’s multimillion-dollar gambles on mining stocks were wiped out. By the time of his second big coal venture – the purchase of the Maules Creek coal deposit in New South Wales for A$480m from Rio Tinto in 2009 – he could muster only A$9m of a A$24m deposit.
Talbot rode to the rescue, lending him $15m that would put him on track to a billion-dollar fortune. But before he could join Talbot on the rich list, Tinkler lost his mentor in extraordinary circumstances. Talbot had been committed to stand trial over a corruption scandal involving his payments to a former Queensland government minister, Gordon Nuttall, who was subsequently jailed. But Talbot, who privately told an associate he expected to go to jail, died in a plane crash in Congo in 2010, two months before he was due to face trial.
Tinkler publicly spoke of his sadness after Talbot’s death, calling him “a great Australian”. Ever the late payer, though, Tinkler did not repay the A$15m loan until he was threatened with legal action by Talbot’s estate.
Buoyed by ever-rising coal prices, Tinkler’s new vehicle for the Maules Creek deposit, Aston Resources, floated with a valuation of A$1.2bn, later merging to form the A$5bn Whitehaven Coal.
In 2011, aged just 35, Tinkler was named Australia’s youngest billionaire. He bought the Newcastle Jets A-League football club and the Newcastle Knights rugby league team. But just two years later, with the coal industry on the slide and Maules Creek beset by delays, the cash-starved, highly leveraged coal baron had blown his paper fortune.
In the years since, the trappings of wealth have gradually dropped away in forced sales: the teams, the racehorses, the jets, the helicopter, Patinack Farm. The inevitable unwinding of a once-in-a-lifetime boom, along with Tinkler’s habit of testing his debtors’ patience, made his journey to bankruptcy seem like a slow-motion car crash. He told the Australian newspaper on Thursday: “The [anti-coal] activists are winning: I’m just one more coal miner out of work.”
His bankruptcy prevents him from acting as a company director with his latest venture, Australian Pacific Coal, another highly leveraged bet on coal prices for which he raised a $30m deposit in January and was paid $700,000 a year as managing director.
The outlook for what was often referred to last decade in the Australian business press as “black gold”, in the view of some analysts, means stories like Tinkler’s will become far rarer.
Goldman Sachs last month heralded a permanent “structural decline” for thermal coal, forecasting a long term average price of US$42.50 a tonne – a far cry from the US$140 it fetched around the peak of the boom in 2009 and its post-financial-crisis rally in 2011. Tinkler’s plays were in coking coal, which has sunk from US$300 to US$81 a tonne.
Noble Group, Tinkler’s first backer, just days ago wrote off $1.2bn on flagging coal investments, primarily in Australia.
Former Citibank analyst Tim Buckley says coal’s flat outlook, in line with waning demand in China and India, as well as a growing reluctance among banks to lend on commodity projects, make the emergence of another billionaire gambler a remote prospect. “You can only do what Nathan Tinkler did if the banks are onside,” said Buckley, adding: “I don’t think the banks are that stupid.”