Chinese miner CITIC has said its ongoing royalty battle with Clive Palmer continues to threaten the viability of its Sino Iron project in Western Australia, as it announced a small profit increase in 2017.
CITIC in late March announced a modest profit growth to $7.3 billion, after $1.2 billion in value was written off on the Sino Iron magnetite mine, which the Chinese firm developed in tandem with Palmer.
Palmer and CITIC have since split, but an ongoing battle brought by Palmer over royalties is frustrating the Chinese conglomerate.
Palmer is suing his former business partners for $4.7 billion over disputed payments for the Sino Iron, and the impact that had on the failure of his Palmer Petroleum and Queensland Nickel businesses.
Palmer earlier this year opened a $2.7 billion case in the WA Supreme Court over the collapse of Palmer Petroleum, and another case in Queensland over the collapse of Queensland Nickel.
Palmer says the collapse of Palmer Petroleum resulted in the loss of the company’s oil and gas assets in Papua New Guinea, and the collapse of Queensland Nickel also led to a major loss of refining assets.
He is claiming the lack of timely royalty payments from CITIC for the Sino Iron project contributed to the failure of his other businesses.
The move by Palmer came after CITIC was ordered to pay $353 million to Palmer’s business, Mineralogy, by a Western Australian court, over royalty payments for Sino Iron.
The ruling also forces CITIC to pay Palmer continuing royalties, which could add up to billions of dollars over the life of the project. CITIC is appealing the ruling.
Palmer’s company also holds the keys to CITIC extending the life of Sino Iron, as it is the lease-holder.
“The financial implications of this judgement as it currently stands, along with the need for co-operation to secure vital life-of-mine approvals and land access, are serious,” CITIC chairman Chang Zhenming said this week.
“The risks to the long-term future of the project remain real.”