A disagreement has emerged between the Western Australian Government and Clive Palmer over the dispute between the mining magnate’s company, Mineralogy, and China’s CITIC Pacific.
State Premier Mark McGowan yesterday commented on a quarrel between Mineralogy and CITIC over a planned expansion of the Sino Iron project in the Pilbara.
According to a media report, the Premier warned Palmer that changes could be made to Mineralogy’s state agreement covering the project to help resolve the ongoing issue.
CITIC operates at the Sino Iron project through a lease agreement with Mineralogy and has a direct and indirect workforce of close to 3000 people at the site.
The relationship between the two companies has been delicate since it broke down following a disagreement over royalties that are supposedly owed to Palmer.
CITIC, with subsidiaries Sino Iron and Korean Steel, has also been pursuing the expansion of the magnetite project.
Their troubled relationship with Palmer separately escalated over these plans last month when CITIC launched legal proceedings in the Australian Federal Court to force Mineralogy’s approval and submission of proposals needed for the expansion.
CITIC alleges that Mineralogy has denied providing its approval for the expansion by joining the subsidiaries in submitting the proposals to the state, putting the future of the project and its employees at risk.
Palmer said Mineralogy had religiously complied with each and every term of the state agreement.
“The Premier’s office or the state Parliament should not be used to avoid the requirements of Commonwealth law. Australian sovereignty, the independence of our courts, and the rule of law underpin our democracy,’’ Palmer said in a statement.
“In the last month, Mineralogy has contacted Sino Iron and Korean Steel on a number of occasions but they have refused to confirm any meeting to discuss their expansion proposals which is disappointing.”
Palmer has written to the WA Premier over a lack of consultation and due process surrounding the expansion proposals, which include acquisition of new rights and property at Cape Preston.
“Both Sino Iron and Korean Steel are Chinese state-owned companies. The Foreign Investment Review Board (FIRB) and Commonwealth Law requires such activity to be approved by the FIRB,’’ Palmer said.
“Mineralogy and the state are bound by Australian law and cannot consider or approve such proposals until they comply.”
Palmer claims that Sino Iron and Korean Steel have refused to comply with Australian law and make an application to FIRB.
CITIC believes Sino Iron has reached a stage where further approvals are required for mining and processing operations to continue at the operation.
It has commissioned all six processing lines and shipped more than 50 million tonnes of concentrate since 2013.
To expand the site CITIC requires additional sub-lease tenure for project infrastructure, including for waste rock and tailings storage facilities.
CITIC Pacific mining chief executive officer Chen Zeng, commenting last month, said it was the company’s view that Mineralogy’s ongoing failure and refusal to submit the proposals and take other steps had caused and would continue to cause loss and damage to the subsidiaries.
“Initially this has led to significant increased costs in planning, developing and operating the project. The ultimate effect will be a substantial reduction in the scope of operations of the project. It may result in the suspension of those operations,” Zeng said.
Sino Iron has become the largest seaborne supplier of high-grade magnetite iron ore concentrate to China, according to CITIC.