Citic Pacific backed by judge on day one of iron ore royalties case
Judge says on day one of hearing in ore dispute he is struck by the 'unreality of proceedings'
A judge has expressed reluctance to let the Australian tycoon Clive Palmer cancel a A$215 million (HK$1.71 billion) mining right transfer agreement signed seven years ago with the Beijing-backed property-to-steel conglomerate Citic Pacific over Citic's failure to pay royalties.
Citic Pacific has already spent A$7.1 billion on infrastructure on the site in Western Australia owned by Palmer, and expects to start shipping processed ore next month, three years later than planned, after construction delays.
A two-day court trial began yesterday in Perth, after Palmer's company Mineralogy filed a law suit seeking a court order that would let it terminate the land use and mining rights of Citic Pacific's Sino Iron division according to the agreement of 2006.
However, in the Western Australian Supreme Court, Justice James Edelman said at the conclusion of the first day in court: "I would have real difficulty making the declaration as sought." He ordered both sides to file additional evidence in writing by Friday.
According to the agreement made in 2006, Sino Iron agreed to pay Mineralogy a royalty quarterly on raw ore "taken" by Sino Iron, made up of a payment of 30 Australian cents per tonne of ore taken, and an additional royalty based on a formula using the volume of processed ore produced and its market price.
Citic Pacific agreed to start paying royalties on extracted ore after it was crushed and weighed. Palmer claims that the royalty is due when the ore is removed from the ground. Citic Pacific's lawyer said the firm will pay the royalty if it is found liable.