Clive Palmer to keep collecting $1m a day from Citic as court ruling locks in Mineralogy payments
Clive Palmer will keep collecting more than $1m a day from Citic after court largely dismissed appeal.
Clive Palmer’s lawyers have cemented the Queensland businessman’s place on Australia’s rich-list, winning a legal victory in the WA Supreme Court that will ensure more than $1 million a day flows into Mr Palmer’s coffers from China’s biggest company.
The WA Supreme Court today dismissed an appeal from China’s Citic in a complex iron ore payment dispute, upholding the validity of a lucrative iron ore royalty ruling that ensures Citic pays Mr Palmer’s Mineralogy about $US10 for each of the millions of tonnes of iron ore it ships from Western Australia.
Citic, China’s biggest company, has been locked in a battle with the Queensland businessman for much of the last decade over the payments, a royalty from the massive Sino Iron magnetite project in the Pilibara.
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It is worth about $US10 a tonne of magnetite concentrate, and Citic shipped 19 million tonnes of magnetite iron ore from the project last year, rising to about 24 million tonnes if the project ever reaches its maximum run-rate.
The payments — first ordered by a Supreme Court judge in late 2017 — were the major source of revenue in bankrolling Mr Palmer’s $60m failed attempt to win his way back into federal parliament at the weekend’s election.
Citic had appealed the 2017 decision, arguing that the royalty was being calculated on the basis of a benchmark price for iron ore that no longer exists, but the WA Supreme Court rejected its appeal today.
Citic won a minor review of the arguments around the way the royalty is calculated, but that aspect of the decision is not expected to have a material impact on the scale of the payments to Mr Palmer.
Mr Palmer said it was disappointing Citic had spent five years in litigation, again blaming Citic for the collapse of his Queensland nickel business, which collapsed in 2016 as the nickel price tumbled.
“During these five years, Citic continually just took the ore. Those funds not paid at that time to Mineralogy would have been used to keep Queensland Nickel open and 3000 jobs in North Queensland would not have been lost,’’ Mr Palmer said
A spokesman for Citic said the company was disappointed in the decision and would examine the ruling closely.
“Citic has made a significant investment in Sino Iron, pioneering a new downstream processing industry and delivering local jobs and other major economic benefits for the Western Australian community, as well as Mr Palmer directly,” he said.
“Our challenges are well-publicised but we will continue to do everything possible to put Sino Iron on a long-term sustainable footing, for the benefit of all Western Australians.”
The royalty dispute is the centrepiece of a sprawling legal battle between Mr Palmer and Citic over an agreement cut in 2006, as the iron ore price began to boom.
The agreement was unusual in Australian mining circles as Mr Palmer effectively only sold Citic the right to mine at his tenements in the Pilbara, leaving the Queensland businessman as the company’s landlord.
The royalty being paid by Citic was originally to be based on benchmark price for iron ore negotiated annually by steel mills and iron ore producers. Citic had argued that rate should be scrapped as the annual benchmarking system disappeared in 2010, which iron ore spot prices became the dominant way in which iron ore contracts were priced.
Separate disputes still rage, with WA Premier Mark McGowan threatening to vary a State Agreement at the project to allow Citic to expand its tailings dam without requiring a sign-off from Mr Palmer’s Mineralogy, a dispute the Premier and Citic say threatens the viability of the project and thousands of WA jobs.
Mr Palmer again criticised Mr McGowan over his threats to intervene in the dispute today.
“Why would the WA Premier give commercial advantage to a foreign company? The WA Government should be protecting the rule of law,’’ Mr Palmer said.
“Mineralogy has always been willing to assist with the progress and development of this project, however Citic has had the view that it gets everything for free as it is owned by the Chinese government.
“Why is the WA Government interfering in a commercial transaction and not simply allowing the rule of law to apply equally.”
