Clive Palmer’s MinerAlogy and Chinese company Citic Pacific in longstanding mining dispute

BEIJING has hit back at Clive Palmer over his explosive spray against China. What’s it all about? Money, of course.

BEIJING has hit back at Clive Palmer over his explosive spray against China, condemning his remarks as absurd and irresponsible.

The Chinese embassy in Canberra rebuked the federal MP for a tirade on ABC television in which he called the Chinese government “mongrels” and “bastards”.

“The words of Mr Clive Palmer MP are absurd and irresponsible, which are full of ignorance and prejudice,” a spokesperson for the embassy told AAP.

But the Palmer United Party (PUP) leader isn’t showing any sign of backing down from his remarks.

When asked if he stood by his use of the term “mongrel” to describe Australia’s largest trading partner, Mr Palmer said it was “an accurate reflection” of a government that executed its own people.

“They have one-day trials, they don’t have any democracy,” he told Fairfax radio station 3AW.

“I feel for the Chinese people that live under such tyranny.”

Unrepentant: Palmer United Party federal leader and Member for Fairfax, Clive Palmer.

His lack of remorse threatens to fan the flames even further, after politicians of all persuasions spent the day trying to distance themselves from his remarks.

The federal government, which hopes to finalise a free trade agreement with China this year, issued a statement to make it “perfectly clear” it valued its relationship with the Asian powerhouse.

“Peripheral issues will not distract the government in its work to broaden and deepen this most important relationship,” Trade Minister Andrew Robb said.

Foreign Minister Julie Bishop labelled the comments “offensive, unnecessary and unacceptable”, while Labor leader Bill Shorten said they didn’t reflect the views of most Australians.

“I think a lot of Chinese-Australians would understandably feel hurt by these comments,” he said.

But two of Mr Palmer’s senators stood up for their boss - albeit with very different defences.

Outspoken PUP senator Jacqui Lambie said the Chinese threat to the “western world democracies” was at an unprecedented high and Australia should double its military immediately.

“If anybody thinks that we should have a national security and defence policy which ignores the threat of a Chinese communist invasion - you’re delusional and got rocks in your head,” she said in a statement.

Her colleague, Chinese-born PUP senator Dio Wang, said Mr Palmer’s comments were taken out of context.

“There has never been the slightest suggestion on his part of a prejudicial view of members of the Chinese community,” he said in a statement.

WHAT’S IT ALL ABOUT?

Mr Palmer has accused the “communist Chinese government” trying to take over Australia’s ports to steal the nation’s natural resources but has clarified the comments were not in reference to “Chinese people”.

My #qanda comments not intended to refer to Chinese people but to Chinese company which is taking Australian resources & not paying #auspol

— Clive Palmer (@CliveFPalmer) August 18, 2014

So what was it all about? Money, of course.

MINING ROYALTIES

It is no wonder tensions are running high — the project that is causing all the fuss is Australia’s largest magnetite mining and processing operation, the massive Sino Iron project.

Citic Pacific owns the $7 billion-plus project in partnership with China’s state-owned Metallurgical Group Corporation.

The multi-billion dollar Sino Iron project which is the subject of numerous legal actions. Photo: Courtesy of Citic.

The project is based in Western Australia's Pilbara region and Mr Palmer has granted the group a 25-year lease over his sprawling Australian Mardie Station cattle farm.

According to the Citic website, the project will generate about $111 billion in direct revenue to the Australian economy and $5.5 billion in royalties for Western Australia.

Citic paid $415 million to Mr Palmer’s company Mineralogy to mine his land and also agreed to pay royalties on each shipment of magnetite, a type of iron ore that can be used to make steel.

But between signing the deal and the first shipment, iron ore pricing changed and this saw prices halve in five years. The two companies have not been able to agree on a new way to calculate the iron ore price and Citic has not paid royalties to Mr Palmer’s company.

Zhang Jijing (left), president of Citic Pacific.

The situation is complicated because of another unresolved dispute over $12 million of Citic’s money allegedly being used for Mr Palmer’s election campaign. The company has also raised concerns over Mineralogy’s ability to operate the port where the resource is exported overseas.

PORT OPERATOR

Mr Palmer stood to make tens of millions of dollars after his company Mineralogy was appointed as the operator of Port Preston, which was built to ship the iron ore overseas.

Citic built the port and is the only company using it. But in January last year, the federal government approved Mineralogy as the port’s operator. It eventually reversed this decision after Citic objected and the West Australian government, which owns the port, sought to remove Mineralogy as the port operator in February 2013.

Dispute over whether Mineralogy should be operating Cape Preston. Photo: Bruce Long

In response, Mr Palmer started legal action in the Federal Court in April to stop Citic from accessing the port.

A judge found in favour of Mineralogy following its challenge of the federal department’s position.

An appeal is now being heard. As part of the legal action it was claimed that Mineralogy had been misleading the federal government by suggesting that it was operating the port facilities while Citic was only playing a minor role. However, during inspections, officers claim the opposite was found to be true.

MONEY USED FOR ELECTION

Citic has also accused Mineralogy of siphoning off $12 million from a business bank account that was supposed to be used for operating the port.

Mr Palmer is accused of personally signing two cheques, one for $10 million and another for $2.167 million, which drained the Chin­ese funds from a National Australia Bank last September.

The mining magnate has strenuously denied misusing the funds.

The $10m was allegedly funnelled into Cosmo Developments, a company controlled by Mr Palmer, in early August. The $2.167m went to a Brisbane agency, Media Circus Network that ran the Palmer United Party’s 2013 election advertising campaign.

The $12 million was put back into the account after media reports were published. Mr Palmer has since been elected to parliament and has resigned as director of Mineralogy and Cosmo Developments.

Tony Jones, the host of ABC’s live panel show Q&A asked Mr Palmer on Monday night if he could promise that “not a cent of that $12 million” went missing under his watch, but Mr Palmer refused.

“I can tell you that those allegations are not true … we will be taking immediate action in the Supreme Court,” Mr Palmer responded. He is due back in court next week.

Successful campaign but was PUP’s election advertising funded using Chinese money? Mr Palmer is pictured with his senators and Motoring Enthusiast senator Ricky Muir. AFP PHOTO/William WEST

Mr Palmer also said: “We’ve had three judgments in the Federal Court and the Supreme Court of Western Australia and an arbitration against these Chinese mongrels — I’m saying that because they’re Communist, they shoot their own people, they haven’t got a justice system and they want to take over this country.

“And we’re not going to let them,” he added.

“The Chinese government wants to bring workers here to destroy our wage system ... they want to take over our ports and get our resources for free.

“So far they’ve shifted $200 million worth of iron ore out of this country without paying for it. I don’t mind standing up against the Chinese bastards.”

But West Australian Premier Colin Barnett yesterday refuted the claims, saying: “Citic Pacific have paid all of their royalties on time — they have been impeccable in that”.

Mr Palmer has only had one successful Supreme Court ruling, which said he was entitled to claim a very small royalty from the project, worth perhaps just hundreds of thousands of dollars. A Federal Court judgment that gave him more power over the project’s port at Cape Preston, is under appeal.

Treasurer Joe Hockey said Mr Palmer’s extraordinary televised tirade was hugely damaging for Australia and that the mining magnate had been a big beneficiary of Chinese investment in Australia.

“He is in a very obvious legal dispute with his Chinese partners but I’d say to Mr Palmer, please don’t bring down the rest of Australia because of your biases.”