Iron exports defy Clive Palmer

THE Abbott government has backed a major Chinese company with a decision out of Canberra that sidelines political rival Clive Palmer.

THE Abbott government has backed a major Chinese company with a decision out of Canberra that sidelines political rival Clive Palmer and thwarts his attempts to prevent valuable iron ore concentrate being shipped to China from the Pilbara region of Western Australia.

The high-level decision to give the green light to the first loading of a Chinese vessel with concentrate from Mr Palmer's tenements means West Australian Premier Colin Barnett will today mark the occasion with Chinese dignitaries at Cape Preston, near Karratha, just hours before Mr Palmer's maiden speech in federal parliament.

But senior sources told The Australian yesterday that Mr Palmer, whose Mineralogy company purports to control the port at Cape Preston, is angrily rejecting the move and is threatening to launch a new round of legal action in a bid to block the imminent supply of the iron ore concentrate to mills in China.

Mr Palmer claims to be owed hundreds of millions of dollars in royalties by Citic Pacific, which has spent more than $7 billion on the trouble-plagued project - the largest ever undertaken in Australia by a Chinese company.

Citic Pacific emphatically rejects Mr Palmer's claims to be owed such royalties. The powerful state-controlled company and the leader of the Palmer United Party, who may hold the balance of power in the Senate from July, are locked in Federal Court and Supreme Court litigation after the collapse of their relationships.

The loading of the vessel this week will heighten the existing tensions and is likely to ignite a new row between Mr Palmer and the Abbott government.

Sources said Mr Palmer's influence in any negotiation over the disputed royalties had been dealt a big blow by the decision of the heads of the federal Department of Infrastructure and Transport to give the green light to Citic Pacific to start shipping from the port at Cape Preston.

A Chinese vessel will take the first load of about 40,000 tonnes of concentrate with a value of almost $4 million to steel mills in Jiangsu province in China.

The West Australian government, which backs Canberra's decision, can start receiving state royalties almost immediately under the terms of its arrangements with Citic Pacific.

But the action comes amid an unresolved Federal Court case in which Mr Palmer has asserted his company controls the port and that the Chinese are not allowed to ship without his permission, which he has not granted. Mr Palmer's blocking of shipments meant that Citic's costs kept rising with no revenues.

The turnaround by the federal government in sidelining Mr Palmer and granting Citic Pacific the right to ship the iron ore concentrate comes after a decision on January 31 this year by the Transport Department to designate Mr Palmer's company the role of port operator for the Cape Preston security-regulated port.

The decision gave Mr Palmer a potentially lucrative exclusive right as well as a stronger bargaining position with Citic Pacific. But the head of the Transport Department has since backflipped and now describes the earlier decision as "legally defective" and a "jurisdictional error" that it wants revoked.

The Federal Court is yet to deliver a judgment, however, transport has now ruled that in the meantime the port can be run by the West Australian government to ensure Citic Pacific can start shipping the concentrate. Mr Palmer and his company Mineralogy have so far received $US415m from the state-owned enterprise for rights to mine the iron ore.

Citic Pacific president Zhang Jijing said last week his company had spent billions "developing the port and associated infrastructure, (and) we only want to ensure our export activities are not hindered by third parties with commercial agendas".

"Mineralogy's attempts to have the project suspended have been rejected twice by the court," he said.

Mr Palmer did not respond to questions yesterday, however, Queensland Premier Campbell Newman said on the eve of the maiden parliamentary speech: "Frankly, you cannot believe what Mr Palmer says from one day to the next because he changes his mind from one day to the next. I'm not at all concerned because I've heard the nonsense, the rants, the name calling, the baloney, the flip flops for many, many, many months ... (and) it is time, really, that this sad, sick political joke is exposed for what it is and that's the Palmer United Party.

"It is about the ego of one man and it is about him and his business interests, not about the people of his electorate nor the people of Australia."