From the Poseidon Nickel Bubble to the 1987 Crash of Australia’s Corporate Cowboys

During the two decades between 1969 and 1989, Australian equity markets transitioned from a patchwork of loosely policed, club-like state trading floors into a unified national securities regime—a regulatory evolution forged in the wreckage of two extraordinary speculative manias. First, in September 1969, a nickel sulfide discovery at Mount Windarra in Western Australia propelled shares of tiny Adelaide explorer Poseidon No Liability (NL) from A$0.80 to an intraday peak of A$280 in February 1970, igniting a nationwide mining stock frenzy marked by insider trading and brazen hoaxes such as the Tasminex affair. The ensuing collapse prompted the Australian Senate to establish the Select Committee on Securities and Exchange—whose explosive 1974 Rae Report laid the foundation for national corporate regulation and the April 1987 amalgamation of six state bourses into the Australian Stock Exchange (ASX). Yet within six months of the ASX’s birth, a second, far larger credit-fueled mania—the 1983–1987 boom of leveraged “corporate cowboys” including Alan Bond, Christopher Skase, Robert Holmes à Court, and Laurie Connell—shattered on “Black Tuesday,” October 20, 1987, when the Australian All Ordinaries Index plunged 25 percent in a single day and 50 percent from its peak. ^[1]

The 1969 Windarra Strike and the Poseidon NL Nickel Mania#

The catalyst for Australia’s great mining boom of 1969–1970 lay in a severe global shortage of nickel. Driven by stainless-steel demand during the Vietnam War and a prolonged four-month strike by 17,000 mineworkers at Canada’s International Nickel Company (Inco) in mid-1969, free-market nickel prices on the London Metal Exchange surged from £900 per ton to an unprecedented £7,000 per ton. Following Western Mining Corporation’s rich 1966 nickel strike at Kambalda in Western Australia, dozens of speculative “No Liability” (NL) exploration companies—a uniquely Australian corporate structure created in the nineteenth-century gold rushes under which shareholders could walk away from unpaid calls on partly paid shares—began staking claims across the arid Western Australian goldfields. ^[2]

One of the smallest of these dormant explorers was Adelaide-listed Poseidon NL, which had just 2.5 million issued shares trading at A$0.50 to A$0.80 in mid-1969. Guided by hard-charging Adelaide stockbroker and geologist Norm Shierlaw, Poseidon hired prospector Kenneth Shirley to drill tenements at Mount Windarra, near Laverton, 260 kilometers northeast of Kalgoorlie. In late September 1969, percussion drill hole PH2 intersected massive nickel and copper sulfides. As the Senate Select Committee later documented in painstaking detail, before any public disclosure was made to the stock exchange, Poseidon directors, their associates, and connected Adelaide and Melbourne brokers quietly accumulated tens of thousands of Poseidon shares between A$0.80 and A$1.85. ^[3]

On Monday, September 29, 1969, Poseidon released a brief statement reporting that drilling had intersected 40 feet of nickel-copper sulfides, sending the stock to A$7.00. Two days later, on October 1, 1969, Poseidon electrified trading floors in Adelaide, Melbourne, Sydney, and London by announcing that assays from the hole averaged 3.56 percent nickel and 0.55 percent copper, including a peak section assaying 9.38 percent nickel. Poseidon shares rocketed to A$12, then A$50 in November, and A$130 by Christmas 1969. Caught in a transatlantic speculative fever fueled by British institutional buyers and Australian retail punters, Poseidon shares hit an all-time intraday high of A$280 on the London market (and A$272 in Australia) in early February 1970—valuing a company with no operating mine and a few drill holes at roughly A$700 million. ^[4]

The Tasminex Hoax, the Bust, and the 1970–1974 Rae Report#

Poseidon’s 35,000-percent ascent triggered an indiscriminate mania across Australian state stock exchanges. Between late 1969 and early 1970, more than 200 newly floated speculative exploration companies listed on the Sydney, Melbourne, Perth, and Adelaide exchanges. Hairdressers, taxi drivers, and office clerks crowded exchange public galleries as rumors of “pegology”—merely staking desert acreage somewhere near Windarra—doubled share prices within hours. Stockbroking partners routinely took massive private share allocations in floats they underwrote, engaged in “churning” and wash sales, and operated without statutory prohibitions against insider trading. ^[5]

The absurdity of the boom peaked in late January 1970 with the notorious Tasminex NL affair. On January 27, 1970, Tasmanian businessman Bill Singline, chairman of tiny explorer Tasminex NL, was interviewed by a journalist at a dusty airstrip in Western Australia after inspecting drilling at the company’s Mount Venn prospect. Singline remarked that his geologist had identified “massive sulfides” and boasted that the strike could be “bigger than Poseidon”—neglecting to mention that the sulfides were common iron sulfides (pyrite) rather than high-grade nickel. Overnight in London and the following morning in Australia, Tasminex shares exploded from A$3.30 to A$96.00 (while Singline and his associates dumped tens of thousands of their own shares onto the market for windfall profits exceeding A$1 million). Within days, laboratory assays confirmed there was virtually no commercial nickel at Mount Venn, and Tasminex collapsed back below A$1.00. ^[6]

The Tasminex scandal shattered public trust just as global nickel prices began to ease following the resolution of the Canadian Inco strike. Throughout mid-1970, mining stocks crashed by 80 to 95 percent; Sydney’s major broking house Leopold & Co. failed in 1971 after embezzling client scrip, and Poseidon itself—burdened by lower-than-hoped ore grades, falling metal prices, and soaring development costs—fell into receivership in 1976 before its Windarra mine was absorbed by Western Mining. Outraged by the carnage, the Australian Senate voted on March 19, 1970, to establish the Select Committee on Securities and Exchange, chaired from August 1971 by Tasmanian Liberal Senator Peter Rae. Tabled in 1974 across multiple volumes titled Australian Securities Markets and Their Regulation, the landmark Rae Report exposed endemic insider trading, broker front-running, share-price rigging, and the complete failure of state stock exchange committees to police their own members. Its recommendations directly drove the criminalization of insider trading, the creation of the National Companies and Securities Commission (NCSC) in 1979 (replaced by the Australian Securities Commission in 1991, now ASIC), and the eventual unification of the six state stock exchanges into the single Australian Stock Exchange (ASX) on April 1, 1987. ^[7]

The 1983–1987 ‘Corporate Cowboy’ Entrepreneur Boom#

Yet even as Australia modernized its market plumbing in the 1980s, financial deregulation unleashed a new, debt-fueled speculative wave. In December 1983, Prime Minister Bob Hawke and Treasurer Paul Keating floated the Australian dollar and abolished capital controls, followed in 1985 by the entry of 16 foreign banks into the domestic market. Eager to win corporate market share from Australia’s Big Four commercial banks, foreign lenders and newly aggressive state banks (such as the State Bank of South Australia and State Bank of Victoria) opened the credit taps to a bold new breed of highly leveraged corporate raiders and takeover entrepreneurs. ^[8]

Between 1983 and September 1987, the Australian stock market was dominated by larger-than-life tycoons who used borrowed money, complex cross-shareholdings, and revalued intangible assets to build sprawling international conglomerates: ^[9]

• Alan Bond (Bond Corporation): After becoming a national hero by bankrolling the yacht Australia II to win the America’s Cup in September 1983, the Perth signwriter-turned-mogul borrowed billions to acquire Swan Brewery, Castlemaine Tooheys, G. Heileman Brewing in the United States, Chilean telephone utilities, and—in January 1987—media magnate Kerry Packer’s Nine Network television stations for a staggering A$1.05 billion (prompting Packer to quip, “You only get one Alan Bond in your lifetime, and I’ve had mine”).
• Christopher Skase (Qintex): A former Melbourne financial journalist, Skase used high-yield debt to acquire the Seven Network television stations and build lavish Mirage luxury resorts in Port Douglas, the Gold Coast, and Hawaii, before launching an ill-fated US$1.5 billion bid for Hollywood studio MGM/UA.
• Robert Holmes à Court (Bell Group): Australia’s first billionaire, who launched repeated leveraged raids on industrial giant BHP and accumulated massive equity portfolios pledged against margin loans.
• Laurie Connell (Rothwells Limited): The Perth merchant banker known as “Last Resort Laurie,” whose bank sat at the center of the “WA Inc” nexus linking Western Australian political leaders with leveraged entrepreneurs.

Fueled by takeover fever and the introduction of dividend imputation in July 1987, the Australian All Ordinaries Index soared from below 500 points in 1982 to an all-time peak of 2,306.2 points on September 21, 1987—a more than fourfold surge in five years.

Black Tuesday (October 20, 1987) and the 50% Market Collapse#

When Wall Street’s Dow Jones Industrial Average plunged 22.6 percent on “Black Monday,” October 19, 1987, the shockwave hit Australian time zones the following morning, “Black Tuesday,” October 20, 1987. Because Australian entrepreneurial companies were far more heavily geared than their American or British counterparts—and because speculative mining and takeover stocks represented roughly 35 percent of the Australian index—the rout in Sydney, Melbourne, and Perth was catastrophic. On October 20, 1987, the All Ordinaries Index plummeted by 516 points, or 25.0 percent, in a single session, falling from 2,068 to 1,552.

While Wall Street stabilized after October 19 and recovered its pre-crash peak within two years, the Australian market continued to implode through November 1987 as banks called in margin loans and forced entrepreneurs to dump shares. By November 11, 1987, the All Ordinaries had fallen 50 percent from its September peak to 1,151 points, and it would not regain its September 1987 nominal high until late 1993 (more than six years later, and over eight years in real terms).

Within days of the crash, depositors ran on Laurie Connell’s Perth merchant bank Rothwells, prompting Alan Bond, Robert Holmes à Court, and the Western Australian state government to mount a controversial A$150 million weekend bailout in late October 1987—an effort that collapsed a year later when Rothwells went into liquidation, triggering the Royal Commission into Commercial Activities of Government and Other Matters (“WA Inc”). One by one, the leveraged empires disintegrated as interest rates climbed toward 18 percent in 1989: Holmes à Court was forced to sell control of Bell Group in 1988, Christopher Skase’s Qintex collapsed into receivership in November 1989 with A$1.5 billion in debts (prompting Skase to flee to Majorca, Spain), and Alan Bond’s group imploded under more than A$9 billion in liabilities, culminating in Bond’s 1992 personal bankruptcy and subsequent criminal conviction for siphoning over A$1.2 billion from Bell Resources to prop up Bond Corporation. Out of the twin crucibles of the 1970 Poseidon bust and the 1987 corporate cowboy crash, Australia forged the unified Corporations Law of 1989 and the federal enforcement powers of ASIC that govern its capital markets today.

Theoretical & Balance-Sheet Transmission Mechanism#

In the Kindleberger–Minsky taxonomy of financial instability (Kindleberger, 1978; Minsky, 1986) and Irving Fisher’s (1933) debt-deflation framework, speculative asset booms become systemic crises when credit expansion shifts balance sheets from hedge finance (cash flows covering principal and interest) to speculative and Ponzi finance (relying on rising asset prices and short-term margin roll-overs).

Once monetary tightening or an exogenous shock halts price appreciation, forced margin liquidations trigger Fisherian debt-deflation: fire-sale asset discounts erode bank collateral values, contracting credit supply across the real economy.

Sources and Further Reading

1. Senate Select Committee on Securities and Exchange, “ Australian Securities Markets and Their Regulation (The Rae Report), Part 1, Vol. 3,” Parliament of the Commonwealth of Australia, 1974. Official / State Archive
2. Parliament of Australia, “ Select Committee on Securities and Exchange (1970–1974),” Australian Senate Committee History Archive, 2020. Official / State Archive
3. Rickard Gardell, “ Fifty Years Ago, Poseidon Made Today’s WAAAX Look Waned,” Firstlinks / Morningstar Australia, October 2019. Historical & Financial Reference
4. Johnaru, “ Norman Shierlaw and His Poseidon Set Off Australian Share Market’s Biggest Boom and Bust from Adelaide in 1969–70,” AdelaideAZ Historical Archive, 2021. Historical & Financial Reference
5. Ashley Owen, “ 1987 Crash Part 2: What Happened, Why Was It Much Worse in Australia, and What Is Similar Today?,” Owen Analytics, October 2022. Historical & Financial Reference
6. Graham Hand, “ Four Enduring Lessons from the 1987 Crash,” Firstlinks / Morningstar Australia, October 2017. Historical & Financial Reference
7. Business News Western Australia, “ Alan Bond Dead at 77,” Business News WA, June 5, 2015. Historical & Financial Reference
8. Irving Fisher — "The Debt-Deflation Theory of Great Depressions," Econometrica 1, no. 4 (FRASER Federal Reserve Archive, 1933): 337–357 Central Bank / Monetary Authority
9. Charles P. Kindleberger & Robert Z. Aliber — Manias, Panics, and Crashes: A History of Financial Crises (Palgrave Macmillan) Peer-Reviewed / Academic Research

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