Iron ore billionaire Clive Palmer has shrugged off the most volatile sharemarket conditions in 20 years, saying he is confident his $5 billion resources float — Australia’s biggest in years — will be a success.
Mr Palmer remained tight-lipped yesterday on the timetable for the Resource Development International (RDI) float but said the assets he planned to include in the initial public offering (IPO) would offset the tough market conditions.
WestBusiness revealed his RDI float plans yesterday which, if successful, would mark the biggest IPO in Australia in more than four years.
It would also be the eccentric billionaire’s most high-profile move, eclipsing his fledgling iron ore projects in the Pilbara, the decision to bail out the cash-strapped Queensland branch of the Liberal Party or buy the licence for the Gold Coast United soccer team which will make its debut in Australia’s A League in 2009-10.
RDI’s assets are likely to include a magnetite resource of at least 10 billion tonnes near Cape Preston in the Pilbara as well as an array of oil and gas interests such as a stake in MEO Australia which claims its acreage off Karratha could contain more than 10 trillion cubic feet of gas.
“I don’t think there’s any float (of RDI) proposed in the next three, four, five months so it’s very hard to say that market conditions as they exist now will exist at a later time (when RDI floats),” Mr Palmer said.
“But if you have good investments it doesn’t matter. The market today is very strong for resources anyway.”
Australian Securities & Investments Commission records reveal that RDI is wholly owned by Mr Palmer’s flagship company Mineralogy.
RDI was registered 10 days ago and its board comprises Mr Palmer, his ally Dominic Martino and Mineralogy senior executive Clive Mensick. There are suggestions that former foreign affairs minister Alexander Downer will join RDI’s board.
Mr Palmer yesterday remained tight-lipped on whether RDI would be a miner or just an investor.
But it is clear that iron ore will be the flagship asset of RDI, which received a timely boost yesterday when BHP Billiton confirmed it had joined Rio Tinto in securing an 85 per cent benchmark price increase for 2008 deliveries to Asian steel mills.
Mr Palmer estimates that his landholding around Cape Preston contains up to 160 billion tonnes of magnetite, sufficient to underpin several standalone mining operations.
He has already struck lucrative deals with Citic Pacific and Australasian Resources that give the two miners the right to mine a few billion tonnes of his ore.
Mr Palmer said the plan for RDI was to plug the hole on the Australian investment scene for a mid-size resources house, left vacant by rampant sector consolidation.
Other likely assets in RDI’s portfolio will be his investment in the $3.7 billion Gladstone Pacific Nickel project and plans for a $5 billion steel mill on the east coast.
PETER KLINGER
ARH Price at posting:
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