Clive Palmer has suffered twin blows to his bid to exert control of the Cape Preston port in the Pilbara after a court effectively rubbed him out of any involvement in the port in favour of his estranged Chinese business partner CITIC Pacific.
The Federal Court yesterday upheld a CITIC appeal against an earlier decision upholding his appointment as the security operator of the port.
Separately, Justice Neil McKerracher threw out a Federal Court challenge by Mr Palmer to have CITIC's security plan for the port cancelled in favour of one offered up by his resources firm Mineralogy.
The decisions, likely to be appealed by Mr Palmer, effectively confirm CITIC's position it should be entitled to run the port it built and help ease the Chinese company's concerns Mr Palmer could use control of the port as leverage to pressure it into settling disputes over payments of royalties from the Sino Iron magnetite mine.
The disputes stem from anti-terrorism laws that require major ports to designate a “security operator” at the port, and set out security measures and procedures to safeguard against any “unlawful interference” of maritime transport and facilities.
As CITIC’s landlord at the project, Mineralogy was handed control of security at the multi-billion dollar Cape Preston port by the Federal Department of Infrastructure and Transport early last year.
That decision was subsequently challenged by CITIC as relationships between Mr Palmer and the Chinese State-owned conglomerate turned toxic.
CITIC President Zhang Jijing told WestBusiness early this year the company was concerned Mineralogy control of the port could disrupt its supply chain, and threaten its ability to export concentrate from the $11 billion Sino Iron project.
CITIC’s initial challenge to the Department’s decision – supported in court by the Department itself - was rejected earlier this year, but the Federal Court yesterday upheld an appeal to its earlier ruling, saying the Department of Transport could reassess its initial decision.
It is understood the Federal Government is instead likely to nominate the Pilbara Ports Authority, or the State Department of Transport, to take responsibility for security at Cape Preston.
Justice McKerracher also supported CITIC’s argument that Mineralogy had no involvement in the day-to-day running of Cape Preston, and it was appropriate that CITIC develop a plan to ensure the security of the port.
Justice McKerracher said any underlying dispute as to who was legally entitled to occupy and operate the facilities should have no bearing on the Department’s decision to back CITIC’s security plan. He left the option open for Mineralogy to still submit its own plan, however.
The twin decisions put a substantial dent in Mr Palmer’s claims to have wracked up multiple legal victories over CITIC, who he claims have refused to pay millions of dollars in export royalties from Sino Iron.
Separate legal disputes about royalty calculations, and over a CITIC claim Mr Palmer misappropriated $12 million from a port management fund are still before the courts.
A spokesman for CITIC yesterday welcomed the Federal Court decisions, saying CITIC Pacific remained committed to the development and operation of the Sino Iron Project.
A spokesman for Mr Palmer was contacted for comment.