A COMPANY owned by Queensland's richest man, Clive Palmer, is seeking approval to dump millions of litres of contaminated water into the ocean off north Queensland in a move that could threaten the Great Barrier Reef.

The Courier-Mail understands a crisis is developing at the Palmer-owned Yabulu Nickel Refinery north of Townsville where tailing ponds are dangerously high and at risk of catastrophic failure.

The situation has developed over several years largely because of the wet weather.

Federal Environment Minister Tony Burke is monitoring the situation.

Yabulu, owned by Queensland Nickel, recently requested the Great Barrier Reef Marine Park Authority allow it to pump out the ponds for 370 days.

The water in the ponds is believed to equate with the treated sewage of a city of several million people.

Discussions with GBRMPA saw that request revised down to 40 days but Mr Palmer has continued to ask to dump all the tailing water immediately.

It's believed the refinery then wants to discharge its effluent, temporarily, straight from the refinery into the ocean while the situation is sorted out.

Queensland Nickel can legally discharge the water without permission if the company believes it faces an emergency situation. But GBRMPA is resisting the applications, with environmental scientists deeply concerned about loading inshore waters with nitrogen and metal pollutants.

They argue the discharges would reverse gains made by farmers who have cut the flow of Reef-threatening fertilisers.

They also say tropical coral reef fish only survive in low-nutrient waters and are killed by major influxes of nutrients.

Halifax Bay, where the contaminated water would go, is part of the Great Barrier Reef and supports both dugong and green turtle habitats.

Mr Palmer is believed to have personally held at least two meetings with GBRMPA officials to make his case.

It is believed Mr Palmer made a strong argument that the employment of more than 1000 staff should outweigh the risks to the Reef.

In a statement GBRMPA said yesterday it had invited Queensland Nickel and independent experts to discuss options for preventing pollution entering the marine park.

"'We recognise the right of Queensland's communities to grow and thrive - our primary concern is protecting the Reef now and into the future," it said.

A Queensland Nickel spokesman said the company had always acted within the law and the matter came down to a regulatory issue.

Originally published as Palmer's dumping plan a risk to Reef