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UPDATE 2-Mining magnate Palmer seeks government support to save nickel plant

Published 08/12/2015, 07:11 pm
UPDATE 2-Mining magnate Palmer seeks government support to save nickel plant
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(Adds Palmer comment)

By Sonali Paul

MELBOURNE, Dec 8 (Reuters) - Australian mining magnate Clive Palmer said on Tuesday his Queensland Nickel refinery in Australia was seeking "minimal" government assistance to avert closure of the plant, hit by weak metals prices.

The businessman turned politician warned that the loss of the refinery would have serious consequences for the region around the city of Townsville in Queensland state, placing some 1,600 jobs in jeopardy.

The call for assistance from the Queensland state treasurer's office comes a day after Palmer lost a bid to secure a $48 million advance from China's CITIC Ltd 0267.HK in a West Australian court as part of an unrelated dispute over iron ore, having argued the funds were urgently needed for the Queensland business. urn:newsml:reuters.com:*:nL3N13W272

Earlier on Tuesday, Queensland Nickel Managing Director Clive Mensink, Palmer's nephew, said the refinery was not seeking cash, but wanted a guarantee on a short-term basis secured by more than a billion dollars of assets.

A spokesman for the state treasurer, Curtis Pitt, said the state government had already been seeking a meeting with Palmer over the future of the refinery and had estalished an independent commission to look into the matter.

Executives from the refinery met with Pitt, where talks were aimed at obtaining access to the financial and other records of the privately held refinery.

"The (Queensland) government is not in the business of corporate welfare or bailing out private companies because that would set a very bad precedent for resource companies," a spokesman for the treasurer said.

CITIC bought the rights to its Sino Iron project from Palmer's company Mineralogy for $415 million in 2006 and agreed to pay royalties once production started, but the two companies have been fighting a series of court cases over how much is owed.

Mineralogy's lawyer said during the court hearing that Australia's four major banks and Suncorp had rejected requests for a loan for Queensland Nickel.

Queensland Nickel is one of Australia's biggest nickel refineries with a capacity of 35,000 tonnes a year.

A slump in the nickel price CMNI3 from nearly $30,000 a tonne in early 2011 to less than $9,000 a tonne amid a mounting supply glut has put pressure on many producers of the metal, which is used to make stainless steel.

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