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Clive Palmer in $US150m win against Chinese partner
Stuart McKinnon, PerthNow
November 24, 2017 4:02PM
Colourful businessman Clive Palmer has had a crucial win in a long-running battle against his Chinese partner in the Sino Iron project that could revive the fortunes of his ailing business empire.
Supreme Court Justice Kenneth Martin this afternoon ruled that Mr Palmer’s company Mineralogy was entitled to a so-called royalty B payment on products produced at Sino in the Pilbara and awarded him $US149.4 million in unpaid amounts to date.
The royalty B payment could be worth hundreds of millions of dollars more to Mineralogy over the life of the magnetite mine, assuming it continues to operate.
The dispute between the two parties stems from a 2006 agreement that set out the terms for CITIC to develop the Sino Iron project.
Under that agreement, Mr Palmer was paid $US415 million and was to receive a dual-component royalty from CITIC in exchange for it being able to build, own and operate the project while Mr Palmer retained title to the underlying mining tenements.
A so-called royalty A covering ore taken from the ground has already been settled in Mr Palmer’s favour, but the more lucrative royalty B has continued to be subject to dispute.
Justice Martin’s judgment follows a 10-day trial in June, during which lawyers for CITIC Pacific Mining argued that the company should not be obliged to pay the royalty B payment because it was based on the annual benchmark iron ore price, which no longer exists.
Lawyers for Mineralogy argued that the annual price of iron ore could be derived using a range of existing prices indices including the Platts index and the Baltic Dry index.
Justice Martin found market prices for iron ore from quarter to quarter into the future remain capable of being derived and ascertained, by an expert if necessary.
He also rejected CITIC’s so-called fall-back argument for a “fair and reasonable royalty” as being too far out of alignment with the parties’ 2006 agreement.
It is not yet known whether CITIC will appeal against the decision.
Mr Palmer’s business empire has been under pressure in recent times, spectacularly highlighted by the collapse of his Queensland Nickel business, which he claims cost him more than $2 billion.
But today’s win on royalties including a one-off windfall of $US149.4 million and an ongoing revenue stream could underwrite a rebirth of his business ambitions.