Bankruptcy bid against Citic Pacific unit dropped

PUBLISHED : Wednesday, 19 February, 2014, 1:33am
UPDATED : Wednesday, 19 February, 2014, 1:33am

Mineralogy, the Australian mining company owned by politician Clive Palmer, dropped its bid to push a Citic Pacific unit into bankruptcy as the two companies continue a dispute over royalties from the world's biggest magnetite iron ore project.

Citic Pacific and Mineralogy both confirmed in e-mails yesterday that the February 7 lawsuit to liquidate Sino Iron for non-payment of debt would not go ahead. The withdrawal follows a judge's questioning of the validity of the suit over the unpaid debt.

"That's not a basis for winding a company up," Justice John Gilmour said at a hearing in Perth on Thursday, according to a transcript from the court. "That just means you could sue in the appropriate jurisdiction for recovery of that sum."

Sino Iron, the Citic Pacific unit, spent US$8 billion, more than four times the initial estimate, building the project in Western Australia on Palmer's land.

The partnership fractured as Palmer and Citic Pacific began a legal dispute over the payment and calculation of royalties. That case continues.

Sino Iron was more than three months behind in payments, Mineralogy said in seeking to wind up the company.

"There has been no notice of demand - no statutory demand," Gilmour said. The fact a debt remained unpaid "isn't proof that Sino is unable to pay its debts", the judge said.

Mineralogy also agreed not to end any of the key agreements it has with Sino Iron, which were associated with the lawsuit, and agreed to pay Sino Iron's legal costs, Citic Pacific said yesterday.

Citic Pacific said: "We welcome Mineralogy's change in position."

Mineralogy failed in October in a bid to kick Sino Iron off the property over a failure to pay A$287,000 (HK$2 million) in royalties.