Clive Palmer’s business empire is feeling the pinch with a drop in iron ore prices and this week’s $3 billion write-down of his prized asset, the Sino Iron project in Western Australia.
Mr Palmer’s Chinese partner and mine operator CITIC announced in Hong Kong on Tuesday a larger-than-expected “impairment” against the troubled Pilbara project.
The Sino Iron operation, which has been plagued by cost blowouts, delays and an extraordinary legal battle, is responsible for CITIC’s energy and resource division posting a loss for the year.
Iron ore analyst Philip Kichlechner said the project’s troubles could be traced back to when it all began in 2006.
“There was a huge delay on top of the capital cost blowout, then we had the GFC [global financial crisis] as well,” he said.
“So the challenges were truly overwhelming.”
Nevertheless, Mr Palmer this week shrugged off questions about the mine’s viability.
“I’m pretty happy. I can live on $20 million or $30 million a year and rough it pretty hard,” he said.
On a brighter note, Mr Kirchnlechner said despite a bitter legal dispute between Mr Palmer and CITIC over royalty payments, the Chinese state-owned conglomerate was showing no sign of packing up and going home.
“One of the good things about state ownership is that they have very deep pockets and they are committed for the long term,” he said.
It was a similar story at Mr Palmer’s nickel refinery at Yabulu in North Queensland; despite arguably good longer-term prospects, the operation appeared to be struggling to make a profit.
With prices plummeting over the past six months, it has not been a good time to be a nickel producer.
“The vast majority of them at these prices would not be making any money, particularly those nickel refineries,” Alto Capital’s Carey Smith said.
“Because their supply which is laterite nickel ore has gone up as well, so they’re getting squeezed both ends.”
In June 2013, Mr Palmer announced two major upgrades to generate hundreds of millions of dollars in extra revenue and 500 new jobs.
There is no evidence the promises have delivered, and Queensland Nickel has not replied to the ABC’s inquiries.
“The refinery itself is probably losing tens of millions of dollars at the moment a year,” Mr Smith said.
“I’m sure he [Clive Palmer] has reserves put away elsewhere, but in the long term it definitely will be hurting.”
Plans for Titanic replica run aground
Another promise that has been put on the back burner is Mr Palmer’s plan to build a replica of the Titanic.
The project’s Finnish engineering partner, Deltamarin, has confirmed that work with Mr Palmer’s Blue Star Line had come to a halt.
“At the moment we have no work ongoing,” a company spokeswoman told the ABC.
“Blue Star Line will inform about the eventual continuation of the project.”
But despite signs the cash is not flowing as freely as two years ago, it is difficult to pin down the state of Mr Palmer’s biggest three private companies.
One of the problems is that they have not filed any financial returns since late 2013 — the latest returns are five months overdue.
“It doesn’t set a good example if we have prominent Australian companies associated with politicians not reaching the high bar of disclosure and accountability,” said Jeffrey Knapp, a lecturer in accountancy at the University of NSW’s School of Business.
“Historically, when companies file late or when companies have accountancy irregularities, it can be a sign of deeper problems or a malaise.”
Mr Palmer declined to talk to the ABC about his business affairs.
His spokesman said Mr Palmer was no longer a director of these three companies and that he had retired from business and was now a full-time politician.
But Mr Knapp said this was not a valid defence.
“Mr Palmer is the ultimate beneficial owner of these companies. He does have control and does have the responsibility for ensuring these companies do their financial reporting and get their financial reports in on time,” he said.
Coolum anxiously waits for a cash injection
One community that is anxiously waiting for a cash injection from Mr Palmer is Coolum on Queensland’s Sunshine Coast.
Mr Palmer bought Coolum’s four-star resort in 2011 and courted controversy by installing a series of model dinosaurs and losing a major sports drawcard, the Australian PGA golf championship.
The resort, which was at one time the largest private employer in the region, was shut down last week and 40 staff were laid off.
One of those to lose his job was general hand and event organiser Benny Pike, who is critical of how the resort was run.
“If you leave a car on a vacant block of land and you don’t use it and you don’t mow around it, you know what happens?” he said.
“There was no-one using it, no-one staying there.”
Resort management said the move would be temporary and the venue would re-open “as soon as possible” after a major refurbishment.
The local business community, however, was not convinced.
“We’ve seen that before. We’ve seen things suggested and really I don’t know if they’re the great resort managers they think they are,” the Coolum Business and Tourism Association’s Malcolm Chilman said.
“There’s some scepticism … the resort may be closing down for good.”
Mr Pike said many locals were confused.
“He [Clive Palmer] is the sort of guy, and his group, who likes to prove a point — maybe he will, maybe he will come back,” Mr Pike said.
“Nobody knows, and that is the problem.”