Rail company Aurizon owed AUD 27m in Queensland Nickel collapse

Further to our note last month that Australian mining tycoon, Clive Palmer, was pleading for help to save his nickel company, Queensland Nickel, it appears rail company Aurizon is the largest creditor, with AUD 27m ($18.6m) in unpaid debts, following the financial collapse of Queenland Nickel, which has been placed in voluntary administration. Other major creditors are believed to be the tax office, the Port of Townsville, state-owned power company, Powerlink and chemical firm, Ixom. Aurizon has already taken strain on the ASX over the past month due to plunging commodity prices and an aborted rail project in Western Australia. Furthermore, the fallout from the collapse will be significant for the stability of the Queensland Government, as Aurizon is the largest private sector employer in Townsville,

Aurizon which has taken a battering on the ASX in the past month due to plunging world commodity prices and an aborted rail project in Western Australia would not comment on the money it was owed by Queensland Nickel. It did not make a statement to the ASX.

Mr Palmer, the resources owner turned federal MP, believes Queensland Nickel can trade its way out of troubles, but there are growing fears for the remaining 550 workers at the Yabulu refinery that Mr Palmer bought from BHP in 2009 amid plunging global nickel prices.

Job losses

On Friday, the business announced 237 job losses, a move which also came after Mr Palmer asked the Queensland government for a $35 million taxpayer-funded bailout of his business – a request the government rejected.

Mr Palmer would not comment on Monday, but his nephew and Queensland Nickel managing director Clive Mensink confirmed FTI Consulting had been appointed as administrators, saying the company could return to profitability.

"I believe QNI has the ability to continue its operations and trade out of administration," he said.

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"It is my understanding that the administrators will be in contact with all stakeholders and the operations of QNI will continue on as usual. From our perspective it is business as usual and employees of QNI will continue productivity at this difficult time."

But the fallout from the potential closure of the Townsville refinery, which is the largest private sector employer in the city, would be significant for the Queensland government, which was holding urgent talks with Queensland Nickel on Monday afternoon.

State assistance not ruled out

Premier Annastacia Palaszczuk said she hoped the administrators would finally be able to reveal the true state of QNI's finances. She did not rule out providing financial assistance in the future.

"We need the administrators to get to the bottom of this. We need the true details of the financial records. I'm sure the Treasurer and Under-Treasurer will be looking closely at the outcome," she said.

Federal Independent MP Bob Katter said the state government should still step in to save the refinery.

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But Treasurer Scott Morrison slammed Mr Palmer for the performance of Queensland Nickel, saying the Palmer United Party had "a lot to answer for".

Mr Morrison said he felt for the workers in Townsville, and Mr Palmer had questions to answer over the job losses, especially as Queensland Nickel donated $288,516 to his Palmer United Party in the second half of last year. It also made a donation of $15 million before the 2013 election.

"Clive has a lot to answer for up there. Asking the Queensland or federal government to bail him out I think is a bit rich," he said.

Federal Resources Minister Josh Frydenberg agreed, saying Mr Palmer had to address the issue of his company's political donations before laying off workers.

FTI Consulting, which has previously worked for Mr Palmer on his Palmer Coolum Resort, said it will conduct an independent assessment of the financial position and viability of the business.

"We will undertake an urgent assessment of the financial position and ongoing viability of the company and its business operations. No significant changes to the company's trading operations are anticipated in the immediate term," FTI Corporate Finance and Restructuring head John Park said.

The administrators said they would brief creditors at a meeting later this month.

Mr Palmer's political influence is waning since the defection of two of his senators, Jacqui Lambie and Glenn Lazarus in 2014 and 2015, cost him the balance of power in the Senate.

Despite the the ongoing woes, Mr Palmer's lone senator, Dio Wang, said he was sticking with his boss. He told The Australian Financial Review he "looks forward to campaigning with Mr Palmer" in the election year ahead.