Clive Palmer and CITIC Switching Roles in WA

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(Newswire.net — March 30, 2019) — As published in The Australian on January 22nd, 2019 (“Kiwi flight: Clive Palmer ‘to make Australia great’ from NZ”), Clive Palmer registered 3 companies in New Zealand on December 18th in order to use the free-trade agreements between the countries to sue the commonwealth. Then, after The Australian’s Andrew Burrell pointed out the agreements could not be used to that purpose, Palmer moved his companies once again in February, this time to Singapore, and sent another threatening letter to the WA government. One of the companies in question is Mineralogy International Ltd (MIL), which owns the royalty rights of the $16 billion Pilbara iron ore mining project managed by Hong Kong listed CITIC Limited.  Mineralogy snags Clive Palmer $280m in royalties per year.

The restructuring and offshoring of Mr. Palmer’s companies is being undertaken to protect them from the courts, revenue authorities, and state government of Western Australia, which last month threatened to alter the Palmer-CITIC state agreement if the former did not negotiate a solution for the Sino Iron mine tenements land crisis in Pilbara.  

This poses a dilemma for many of Mr. Palmer’s supporters, who have long considered him a champion of local interests. Palmer is renowned for using Trump-inspired slogans such as “Make Australia Great” and “Put Australia first”.  As Lachlan Murphy, a mining engineer and activist from Perth, pointed out, “How can [Palmer] claim to put the country first when he’s doing everything possible to avoid his obligations to the state and his employees”.  

Mr. Palmer faces difficult questions about his contradictory rhetoric just as he is running for the Parliamentary seat of Herbert in Queensland, where he would represent Townsville, a miners’ town where his Mineralogy previously owned a nickel refinery that went bankrupt in 2016, leaving 800 employees jobless. Mr. Palmer has refused to compensate miners in Townsville for the past 3 years.

On the other side of the country, Mr. Palmer’s joint iron ore project with the Chinese conglomerate CITIC is also in risk, as the two Goliaths cannot solve their land dispute; Sino Iron, a A$10B project in Pilbara, WA, has been the center of a vicious royalties’ battle between Clive Palmer and the Chinese operator. CITIC says it needs more land to continue running the mine safely, but Palmer, the land owner, refuses to grant CITIC permission to use it. 

The dispute, which has been in court for years, reached a boiling point in late 2018, when CITIC announced that without the necessary land, Sino Iron could be shut down, leaving 3,000 Australian miners without jobs. WA Premier Mr. Mark McGowan has stated that he sees Mr. Palmer personally responsible for the dispute and its consequences and suggested he might reopen the state agreement governing Sino Iron to force Mr. Palmer into handing over the land and to help save the 3,000 jobs and billions in state tax revenues. 

Mr. Palmer has since announced that he was would sue the Commonwealth of Australia for $45b in damages over CITIC’s accumulated royalties. This litigious move is made possible through the investment treaty between Australia and New Zealand, signed in 2010 to extend the Closer Economic Relations free trade agreement between the countries. Mineralogy’s re-establishment in New Zealand allows Palmer to call upon the treaty and sue the Australian government. “The Commonwealth would have to pay us compensation within six months. Mark McGowan would be making the taxpayer of Australia pay for this”, said Mr. Palmer in his latest public remarks.

However, Mr. Palmer soon realized he would not be as successful as he believed in his steps against the WA State Government and CITIC; Daniel Kalderimis, Chapman Tripp partner and international trade agreements expert, said Palmer “doesn’t appear to fully understand the regime he appears to be invoking”. The protocol “deliberately does not include an investor-state dispute settlement (ISDS) regime”, said Kalderimis, meaning there was no way for a corporation to sue the Australian Federal Government, let alone a state government.

Mr. Palmer has since moved his companies to Singapore, which has slightly different free-trade agreements with Australia. Experts are still not sure whether this move would allow Palmer to sue the WA government.

But Palmer’s threat to the WA State Government as it is attempting to save jobs, is not likely to go down well with voters. Mr. Palmer himself does not seem to see a problem, however.  “It’s got nothing to do with politics. I’m an Australian, I still live here”, he said.