CITIC Pacific (Hong Kong stock code 0267.HK) is a Hong Kong-based conglomerate which is majority owned by China’s Citic Group in Beijing. Its activities span property, metals and mining, telecoms, and consumer products and its subsidiaries include CITIC Pacific Mining, CITIC Pacific Special Steel and Dah Chong Hong Holdings.
Citic Pacific criticises tycoon Palmer over Australian iron ore dispute
Citic Pacific took a public swipe at Australian billionaire Clive Palmer yesterday over his attempts to halt its long-delayed and massively over-budget US$8 billion iron ore project in Australia.
The Sino Iron project, China's biggest offshore mining investment, was to be a key prong in Beijing's strategy to ease its dependence on the world's dominant iron ore producers, Vale, Rio Tinto and BHP Billiton.
But instead it has been a disaster for Citic Pacific and its contractor, Metallurgical Corp of China (MCC), as they ran into regulatory hurdles, labour shortages, disputes over hiring Chinese workers, safety issues and soaring costs.
To add to its woes, Palmer, who sold the rights to the ore to Citic Pacific, has sued it for what he says are hundreds of millions of dollars owed in royalties and tried to block Citic's port access.
Citic Pacific president Zhang Jijing was frank yesterday about the poor relationship.
"Any claim that we haven't paid our fair share in accordance with agreements is just plain rubbish," Zhang told an audience of mining industry executives, bankers and lawyers in Melbourne.
Zhang was even more open when asked how Citic's relationship with Palmer had soured so badly.
"That's a question I always ask myself," he said, noting he was not new to doing deals in Australia. "I have never met such a person like this gentleman."
He said commercial disputes were not unusual and Citic Pacific always preferred them to be sorted out away from the public spotlight, but that was an "unrealistic expectation" with "some larger-than-life characters involved".
The current dispute between Palmer and Citic Pacific is over a royalty stream potentially involving around A$200 million (HK$1.39 billion). Zhang said the industry benchmarks under which it was to be calculated no longer existed, so the method of calculation needed to be resolved.
Palmer's company Mineralogy was unrepentant in response to Zhang's comments.
"The proposition is Citic wants to come here and suggest the main consideration can't be calculated, yet they still want to take our resources back to China without paying for them," it said. "In our opinion this is tantamount to stealing, and most Australians would be in agreement."