Kiwi flight: Clive Palmer ‘to make Australia great’ from NZ

Clive Palmer has shifted control of most of his business empire to NZ and is threatening to sue Australian taxpayers for $45bn.

Clive Palmer yesterday. Picture: Glenn Hunt

Clive Palmer has shifted control of most of his business empire to New Zealand and is threatening to sue Australian taxpayers for $45 billion in a desperate attempt to stop a Chinese state-owned company from seizing control of a Pilbara mining project.

Mr Palmer’s flagship private company Mineralogy — which is funding his big-spending federal election campaign — is now owned by a company called Mineralogy International Ltd (MIL), set up in New Zealand last month.

Mr Palmer, who is campaigning to win seats using the slogan “Make Australia Great”, rejected suggestions that shifting control of his key assets to another country was hypocritical.

“Australians invest throughout the world and I’ve invested in New Zealand,” he told The Australian. “And I’ve encouraged that New Zealand company to invest in Australia, which it has.”

Mr Palmer said the move offshore meant Mineralogy would be able to claim compensation from the Australian government under the investor protection provisions of the Australia-NZ free-trade agreement. He vowed to launch a damages claim if West Australian Premier Mark McGowan carries through with his threat to legislate in favour of Chinese giant CITIC’s interests in the $US10bn Sino Iron project in the Pilbara.

“The commonwealth would have to pay us compensation within six months,” he said. “Mark McGowan would be making the taxpayer of Australia pay for this.”

The protocol on investment under the free-trade agreement protects investors from one country against “unfavourable treatment” in the other without “prompt and adequate” compensation. This includes expropriation of assets “either directly or indirectly”. In a seven-page letter sent to Mr McGowan last Friday, MIL chairman Michael Mashayanyika said the WA government was proposing legislation that would “result in expropriation or measures equivalent to expropriation, within the meaning of those words in the protocol”.

In November, Mr McGowan threatened to intervene in the latest stoush between CITIC, operator of Sino Iron, and Mineralogy, which owns the mining leases.

CITIC claims Mineralogy is refusing to sign off on planned expansions at Sino Iron that are critical to its viability. Mr McGowan, who says he wants to save 3000 jobs at the mine, has proposed ­altering the state agreement to remove the need for Mineralogy to sign off on expansions.

In his letter, Mr Mashayanyika said if CITIC could submit projects under the state agreement, it could then exercise rights over Mineralogy’s mining leases and other Mineralogy deposits without any payment to Mineralogy.

“If your government proceeds with amending legislation, MIL will immediately make a claim for $45bn against the commonwealth,” he said.

Mr Palmer told The Australian he was receiving $300 million a year in royalties from Sino Iron, which would rise to $600m a year. That meant his interest was valued at $10bn. He said the extra iron ore deposits on the leases exceeded 100 billion tonnes, meaning that any damages claim was likely to be far larger. “If that whole asset was to be lost, $45bn might not be unreasonable,” Mr Palmer said.

In his letter, Mr Mashayanyika questioned why Mr McGowan had failed to meet Mr Palmer to resolve the matter. “It is beyond belief that you would refuse to meet Mineralogy’s representatives considering that Mineralogy is the main party to the state agreement,” he said.

“Mineralogy and MIL have been repeatedly and are being denied natural justice in breach of our constitutional rights. I do not understand how you would travel to China to meet the Chinese government and repeatedly meet with executives of Chinese communist government-owned companies in Perth but refuse to meet with an Australian and a representative of Australian companies who wish to make important representations to you in their commercial and the national interest. Is there some reason of which we are not aware?”

A WA government spokesman said the letter from Mineralogy raised a number of legal matters relating to both state agreements and free-trade agreements that would require advice from the State Solicitor’s Office.