By Rachel Dally-Watkins
September 1, 2015
FEDERAL MP and Mineralogy founder Clive Palmer is suing Chinese-owned CITIC Limited for $10 billion, in the latest of a slew of lawsuits related to the Sino Iron project.
Mr Palmer is seeking damages for what he alleges is a breach of commercial arrangement between CITIC and Mineralogy, resulting in a lack of royalty payments on the $500 million of iron ore concentrate already shipped to China.
Mr Palmer was also suing for royalties covering the life of the project.
In 2006 the companies signed an agreement which relied on the annual benchmark iron ore price struck by BHP Billiton and Vale to calculate the ‘Royalty B’ payments to Mineralogy. With iron ore now traded on daily market conditions, this agreed upon method was no longer valid for the calculation of Royalty B.
“The simple fact is that CITIC Limited continues to export iron ore concentrate from Western Australia and refuses to pay Mineralogy the royalty,” Mr Palmer told media.
A CITIC spokesperson said that the $10 billion claim, taken to the state’s Supreme Court in early September, was “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,” the spokesperson said.
“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.”
CITIC stated that its operations would remain unaffected by the legal proceedings.
At a press conference, Mr Palmer said it was a “Chinese practice” to attempt to bankrupt and “squash” Australian companies.
“To ensure there is a proper respect for our country and our companies and commercial litigation, we think it is about time to bring these people to account, through the courts, for the amount of money which is properly owing to us,” he said.
“This [lawsuit] actually relates to the fact that they are operating on our mining leases in Western Australia now, loading up Australian resources into Chinese ships, shipping them back to China without paying for them.
“This is purely in respect to money that they owe us, for minerals that they have taken from Australia back to China, and not paid even one cent for.”
Mr Palmer also reportedly filed a $170 million claim against two Perth-based directors of CITIC subsidiaries, as well as the Hong Kong-based CITIC Capital director.
The tycoon scored a win in proceedings against CITIC early in the year when the court dismissed a fraud case brought against him two subsidiaries of CITIC, after they alleged he appropriated $12 million deposited with Mineralogy for his election campaign.
However in mid August the court dismissed Mineralogy’s attempts to prevent CITIC from exporting iron ore from the Cape Preston Port, near Karratha, labelling the former’s issuing of termination notices “farcical”.
Mineralogy intended to appeal this decision.