Palmer to sue CITIC for $10 billion

Clive Palmer is taking CITIC to task, seeking $10 billion in damages in the WA Supreme Court.

The proceedings are the latest in a series of back and forth legal actions, including claims of corruption, misuse of funds, defamation, and racism.

The case relates to the rights to the Cape Preston port and iron ore mining leases at Sino Iron Ore.

The $10 billion magnetite project has been built on tenements originally owned by Mineralogy, and the relationship between the two companies soured over the issue of mining royalties. 

It began with a spate of delays and cost blow outs, which CITIC head Chang Zhenming initially blamed on Australian inexperience.

This series of events prompted Palmer to try and pull out of the agreement, in which he owned the land and gave CITIC Pacific mining right, until Mineralogy was awarded royalties.

However this was vetoed by the WA Supreme Court.

The issue of royalties again reared its head after Palmer claimed the Chinese miner was finally paying him royalties, to the tune of $500 million.

“We have a standard right-to-mine agreement,” Palmer said at the time.

“In the agreement it says they pay a royalty when ore is taken. We would say that word ‘taken’ means when you mine it — they would say it means when you take it from Australia.”

Since that time Palmer has continued his attacks, accusing CITIC’s head of corruption, stating that CITIC Pacific president Zhang Jijing of illegally using the company's money to pursue a personal damages claim.

He also accused China of ‘raping’ Australia’s resources, as Palmer sought to gain control of Cape Preston.

Palmer accused the companies of attempting to take Australian resources without paying the full consideration, adding CITIC had forked out closer to $200 million for the magnetite resource.

“I will not stand by and see Australian interests raped and disrespected by foreign-owned companies,” he said.

“Foreign-owned businesses operating in Australia must comply with and respect Australian law.”

CITIC then accused Palmer, and his company Mineralogy of fraud, after subsidiaries of CITIC Pacific stated that Palmer spent $10 million of the company’s money on his election campaign and used a further $2.167 million for other purposes.

Now the legal battles have entered their latest round, as Palmer seeks billions in reparations

“The simple fact is that CITIC continues to export iron ore concentrate from Western Australia and refuses to pay Mineralogy the royalty which even CITIC announced to its shareholder was the commercial basis of Mineralogy granting CITIC its right to mine 2,000,000,000 [tonnes] of magnetite iron ore on Mineralogy Mining Leases,’’ Mineralogy chairman Clive Mensink said.

“By repudiating the commercial arrangements the CITIC companies are liable to pay Mineralogy damages equivalent to the value of the rights CITIC has repudiated.

 “While CITIC’s wholly owned subsidiaries in Western Australia are currently subject to Western Australian court proceedings, CITIC provided guarantees to Mineralogy on the performance of its subsidiaries.

 “CITIC is being sued under those guarantees,” Mensink said.

He then went on to slam WA premier Colin Barnett, claiming he has helped foreign companies over Australian interests.

“No rational explanation has been provided and we can only assume he is more interested in bending over backwards to do a foreign government’s bidding against the interests of West Australians,” Mesink said.

CITIC have responded to the latest damages claims, and Palmer's propensity for legal action.

"The question of any liability for Royalty B and any minimum production royalty is already before the Supreme Court of Western Australia,” a CITIC spokesperson told Australian Mining.

“Mr Palmer regularly makes all sorts of claims against a host of people and organisations. This is yet another claim lodged by his companies since the Federal Court dismissed Mineralogy’s attempt to terminate key port agreements at the Sino Iron project. Like the other claims, it overlaps matters being addressed in other proceedings.

“We look forward to having the validity of these latest claims scrutinised by the courts and will continue to protect the interests of the project, our company and shareholders,” the spokesperson said.

“In the meantime, export operations are unaffected and we’re focused on ensuring the project reaches its full potential.

“Mr Palmer also knows that the Royalty A dispute was never about a refusal to pay.  It was about the point of the mining process at which the liability crystallised. Before the Royalty A proceedings commenced, Mineralogy sought a royalty on everything dug out of the ground, including waste material. In fact, the court ultimately ruled the royalty was payable only on ore mined and transported to the primary crusher or the in-pit stockpiles. Regardless, the matter has since been resolved and payments are ongoing.”

However, it is not just CITIC in Mineralogy's sights, with Mensink stating that WA may be next in the legal firing line.

“Colin Barnett is the Minister for State Development and is responsible for administering the Iron Ore Processing (Mineralogy Pty Ltd) Agreement Act 2002 passed by the Parliament of Western Australia.” 

A company statement added that “Mineralogy was successful in arbitration conducted between Mineralogy Pty Ltd and International Minerals Pty Ltd v the State of Western Australia. The Honourable Michael McHugh AC QC ruled against the State of Western Australia when Minister Barnett failed to carry out the State’s obligations”.

“The judgement had exposed the state to a substantial damages claim.”

The case continues.

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