Five reasons not to rule out Nathan Tinkler

In a rare interview with BRW in 2010, Nathan Tinkler offered this piece of advice: “Never leave yourself with just one option.” Photo: Steve Christo

Nathan Tinkler’s $730 million loss is an indication of just how bad a year the embattled resources boss has had. Having lost top spot on the BRW Young Rich list, Tinkler has a lot of work ahead of him to reclaim his status as Australia’s youngest billionaire.

A global slowdown in the demand for coal and burdensome debt levels have hurt Tinkler. His wealth has fallen from $1.13 billion 12 months ago to $400 million, as reported in the 10-year anniversary edition of the Young Rich list, which details the stories behind the wealthiest 100 self-made Australian entrepreneurs aged 40 or under.

It would be easy to assume that Tinkler is finished as a business force but there are many good reasons why you shouldn’t. Here are five of them:

1. He has been ruled out before – In May 2007, Tinkler’s main business Custom Mining was facing a swarm of angry creditors. They wanted the money Tinkler owed them and decided that having his business wound-up would be the best way to get it. Tinkler had recently agreed to pay $30 million for the Middlemount coal deposit. It was money he didn’t have and most potential investors he approached didn’t want to lend him a cent. Soon after, he sold Custom Mining for $441 million in what is still regarded as one of the great business deals of the past decade.
2. He is still asset rich – Tinkler has a lot of assets: his shares in Whitehaven Coal are worth about $600 million; he has spent up to $300 million on one of the biggest horse racing empires in the country; he has property, sporting clubs and several other assets. His problems don’t involve a lack of physical assets. Rather, too little spare cash and too much debt.
3. He may have other motives – In a rare interview with BRW in 2010, Tinkler offered this piece of advice: “Never leave yourself with just one option.” Is Tinkler not paying debts because he doesn’t have any money or is he not paying because he wants to step away from deals that he no longer considers attractive? Understanding Tinkler’s motives at this point is difficult but expect him to be planning for more than what is immediately obvious.
4. He is well positioned for a rebound in the market – Many of the country’s richest miners have lost vast amounts of money over the past six months. Gina Rinehart and Andrew Forrest have both lost billions of dollars due to the reduction in the spot price for iron ore. Debt problems aside, if the demand for coal increases so will Tinkler’s wealth.
5. He has youth on his side – He is still only 36. Most entrepreneurs don’t have as many great highs and dark lows in a lifetime as Tinkler has had over the past six years. If he does lose it all, and BRW is not saying he will, expect him to work very hard to get it all back again. Many successful business people talk of the importance of failures to the attainment of long-term success.

Tinkler has had some dark days of late but ultimately he may be stronger because of it.

THE LIST: BRW’s Young Rich 2012

• Tweet