Clive spreads the blame

WORKERS laid off from the Yabulu refinery, north of Townsville, could be waiting until July 31 to get their jobs back, if at all.

Noel Dyson
Clive spreads the blame

That is when the owners and operators of the refinery believe they can get it up and running again.

Most of the 550 remaining workers at the refinery just north of Townsville were laid off on March 11.

Queensland Nickel Sales Pty Ltd, the entity that has taken over the running of the refinery from Queensland Nickel Pty Ltd, which was put into administration in January, was supposed to rehire them.

The Clive Palmer headed QNS was appointed to run Yabulu by the Palmer entities QNI Metals and QNI Resources, which own the refinery assets.

QNS has written to the Queensland Department of State Development blaming the state government and the administrators of Queensland Nickel for QNS’ inability to get the refinery up and running by March 11 as it had planned.

That means those workers that joined the 237 already laid off from the refinery in January are in limbo.

In January Queensland Nickel was put into voluntary administration with unsecured creditors owed more than $100 million.

On March 3 QNS was appointed as manager of the Queensland Nickel Joint Venture because QN’s administrators advised the JV partners and the Joint Venture Owners Committee that they intended to close the refinery down.

According to QNS, the administrators and QN’s chief financial officer prepared a cashflow forecast that showed when the finance facility obtained by the JV partners was combined with the ongoing business cashflow, the business would have positive cashflow well into the next financial year.

At a meeting on March 7 the administrators agreed to commit to fund a number of ore shipments so the refinery could continue to operate and several payments were made in subsequent days to buy that ore.

QNI Metals and QNI Resources director Clive Mensink, speaking on behalf of QNS, said that at that meeting it was also agreed the JV property and relevant approvals would be transferred by the administrators of QN to QNS.

“In the following days QNS made relevant applications to the Queensland government to transfer the necessary approvals to operate the refinery once the administrators had terminated the workforce, which was scheduled by the administrators to occur on March 11,” Mensink said.

“As the approvals had been planned to be transferred, in essence, to the same refinery and port operations personnel, it was anticipated that these transfers would not take more than a few days to receive government approval.

“In the days following the meeting on March 7 with the QN administrators, the administrators subsequently decided to freeze the bank accounts of the business and not transfer cash balances to QNS, which meant QNS did not receive approximately $10 million that was planned by QNS to be received from the QN administrators.

“The administrators reversed their decision and instead of continuing to receive ore for the business sought to cancel orders and send the ore to other parties.

“By Friday, March 11 the Queensland government had not transferred all approvals required.

“The administrators had not transferred the assets that were held in the name of QN on behalf of the QNJV to QNS.

“The administrators had not transferred the cash balance of approximately $10 million to the account of QNS as it was required to do. Because of the cancellation of nickel ore orders by the administrators there is no nickel ore projected to be delivered to the refinery.

“The result is QNS is not in a legal position to operate the refinery or, because of the above reasons, does not know when it will be in such a position.

“As a result there could not be a smooth and clear transfer of staff from QN to QNS and as the refinery was already in shutdown mode, 550 jobs were lost from the business.”

A FTI Consulting spokesman explained the firm had no choice but to keep the $10 million cash balance.

“In terms of the $10 million bank account, we are acting independently at all times and in the best interest of the creditors,” he said.

“This includes retaining moneys to pay for any liabilities incurred before we were replaced as the manager of the Yabulu refinery.”

However, the spokesman was unable to say whether the administrators had originally intended to give the $10 million to QNS or had always meant to hold onto it.

The spokesman had a markedly different version of events regarding the ore purchases though.

“We ordered ore which the operator, QNS, indicated it was not willing to accept,” he said.

“We’re looking to sell that ore on the open market in the interest of the creditors.”

QNS has told the state government that to get the refinery running again:

  • It has to obtain the relevant governmental approval;
  • The administrators have to return JV assets, including cash, in accordance with the QNJV agreement;
  • QNS’ financier has to be convinced that there will not be a continuation of attacks on refinery management and that the Queensland government supports refinery operations continuing;
  • Personnel needed to run the refinery have to be identified, their willingness to return ascertained and required staff be re-employed; and
  • A training plan is developed and personnel receive any training needed to meet relevant work health and safety and environmental compliance requirements.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Monthly Intelligence team.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Monthly Intelligence team.


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