CITIC to mine additional 1bn tonnes of iron ore

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CITIC is set to strike a deal with Mineralogy chairman Clive Palmer to mine a further one billion tonnes of iron ore in Western Australia.

The move follows a judgment from the Supreme Court of Western Australia, where Justice Ken Martin ordered CITIC and Mineralogy to resolve their dispute.

This stems to the China project option agreement (CPOA), in which CITIC paid $US15 million ($19.7 million) to Palmer’s Korean Steel and Sino Iron companies with the option to acquire other companies controlled by Palmer, along with rights to access a billion tonnes of iron ore.

CITIC has allegedly been unsuccessful in pursuing the agreed option with Palmer, and has since taken the matter to the Supreme Court.

Tuesday’s draft orders by Justice Martin mapped out the terms for CITIC to acquire Palmer’s Balmoral Iron as an option for the CPOA.

Balmoral would provide CITIC with the ability to mine a further one billion tonnes of magnetite iron ore through the Balmoral South iron ore project in the Pilbara region of Western Australia.

Mineralogy declared Balmoral South as the world’s largest undeveloped magnetite resource.

Justice Martin gave both parties 21 days to consider the final orders of the judgment, with six months to finalise the transaction.

“Effectively, that transaction would see an acquisition of extensive and valuable contractual rights as held by Balmoral Iron (granted to it by Mineralogy) – to a further billion tonnes of magnetite ore in Area A and to other contractual rights,” Justice Martin said.

“All these valuable contractual rights had earlier been obtained by Balmoral Iron from Mineralogy, at the time when the corporation was a wholly owned subsidiary of Mineralogy.”

According to Mineralogy, it has the right to mine one billion tonnes of magnetite iron ore from Balmoral South’s Susan Palmer deposit.

The project is being developed by Mineralogy subsidiary International Minerals.

“There looks to be every good economic reason why an expansion proposal of this character for an established resource project would contribute greater economic benefits to the CITIC plaintiffs and indeed to the West Australian and Australian economies – by fostering even greater magnetite iron ore production and processing,” Justice Martin said.

“That should, in the end, lead to increased prosperity and stability of the employment for the existing workforce and, of course, to enhanced royalty payments to the West Australian and commonwealth governments.”

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