Clive Palmer. Photo: Glenn Hunt
MINING tycoon Clive Palmer is locked in a sensational new legal stoush over the timing of royalty payments that are expected to deliver him hundreds of millions of dollars each year.
The dispute is between Mr Palmer's company Mineralogy and the Chinese company, CITIC Pacific, which is building the $8 billion "Sino Iron" project on his tenements in Western Australia.
It is understood that Mr Palmer's complaint centres on a single word in the contract between the two parties, which determines when the royalties start flowing to Mr Palmer.
Mr Palmer is expected to receive up to $500 million per year in royalties, but the start of those royalty payments is linked to the amount of iron ore mined by CITIC, and the amount exported.
With the project running more than two years behind schedule, Mr Palmer has waited longer than expected for the royalties, and believes that some are now due given that Sino Iron has reached trial production stage.
But no payments have been forthcoming, prompting Mr Palmer to start legal action that alleges that terms of the agreements had been breached, and even repudiated in some cases.
Mineralogy has threatened to terminate lease and mining right agreements over the affair.
On Monday CITIC sought to delay any court action by filing an injunction with the WA Supreme Court.
CITIC said on Monday night that it strongly refuted the claims lodged by Mr Palmer's company, saying they were "without foundation".
"While CITIC Pacific continues to have dialogue with Mineralogy, CITIC Pacific has taken, and will take, all necessary actions to protect its investment including the filing of injunctions against Mineralogy," the company said from Hong Kong.
As recently as August Mr Palmer predicted that full production from Sino Iron - which is expected to be 24 million tonnes per year of magnetite concentrate - was unlikely to be achieved until the end of 2014. Magnetite is a lower grade type of iron ore.
Mr Palmer could not be reached last night.