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Clive Palmer is kidding himself if he thinks Townsville people have forgiven him for the losses they suffered when his nickel business folded, a rival says.

Labor MP Cathy O’Toole says the workings of Mr Palmer’s mind remain a mystery after he said he might seek to re-enter federal politics by challenging her for the Townsville-based seat of Herbert.

“I wouldn’t want to second guess what Clive is actually thinking but I think he’s completely out of touch with our community,” she told AAP on Tuesday.

She said the anger felt by Mr Palmer’s sacked nickel workers was still palpable more than two years after his refinery closed, leaving taxpayers to fund their entitlements.

Many businesses owed money by Queensland Nickel were still recovering, she said.

“He doesn’t live in the community, he’s not of our community and the involvement he’s had in our community has been devastating.”

Earlier in the day, Mr Palmer said Townsville residents had faith in him and could see he was a champion for their city.

He said that if he did decide to contest Herbert, he wasn’t worried about any fallout from the 800 jobs losses caused by the refinery’s closure.

“There was a poll done in Townsville last week – I had a 70 per cent approval rating,” he told the Seven Network.

But that poll, in The Townsville Bulletin, was actually about the level of support for the reopening of the refinery, not the level of support for Mr Palmer himself.

Mr Palmer has announced plans to restart the plant, and partly repurpose it to extract $6 billion-worth of cobalt from discarded mining waste. But he hasn’t said when that will happen.

He has denied using Queensland Nickel as a piggy bank for his other businesses and the first incarnation of his political party, the Palmer United Party.

His rebranded party, the United Australia Party, intends to stand candidates in every upper and lower house seat at the next federal election.

The businessman held the seat of Fairfax, on Queensland’s Sunshine Coast, from 2013 until 2016, when he opted not to recontest the seat.