Chinese fear Palmer will control Pilbara port

CITIC Pacific president Zhang Jijing has played down business concerns that its running brawl with Clive Palmer has hurt Australia's image in China, saying Mr Palmer has damaged only his own reputation.

But Mr Zhang warned that China was watching the situation carefully and CITIC's success or failure at its Sino Iron magnetite mine in the Pilbara was a bellwether for further Chinese investment in WA resources.

Mr Zhang is emerging as one of China's most influential business leaders after Thursday's $US36 billion asset injection into CITIC Pacific from parent company CITIC Group, the biggest and most politically influential of China's state-owned enterprises.

Senior mining executives at this week's Hong Kong's Mines and Money conference privately expressed concerns that Mr Palmer's war on CITIC would harm their efforts to attract Chinese investment and partners for local mining projects.

The Queensland tycoon made multiple attempts to throw CITIC off the project, on which it has spent $US10 billion.

But Mr Zhang said the fairness and transparency of the legal system made Australia an attractive investment destination.

Mr Palmer is still CITIC's landlord at Sino Iron under a State Agreement with the WA Government and the two are battling out at least seven matters in Australian courts, most from a dispute over the calculation of royalties from the Pilbara mine.

"I cannot say this would stop Chinese investors investing in Australia but at least I think it will stop Chinese investors from co-operating with (Mr Palmer's) Mineralogy," Mr Zhang said.

CITIC hoped the State and Federal governments would support one aspect of the dispute - the fight over who would control maritime security at the CITIC-built Cape Preston port, which the company believes has the potential to derail its export efforts.

Mr Zhang said CITIC respected that Australian authorities could not be involved in its contract disputes with Mineraology but security for CITIC's supply chain, which it believes could be disrupted if Mr Palmer won control of Cape Preston's security, was a matter other Chinese businesses were watching closely.

"Obviously the government role in Australia is different from China, so some things they can do and some they can't, we understand that," he said.

"But for us, our top priority for government support is the protection of our entire supply chain from the mine to the port."

Because CITIC was "having some problems with someone", protection was very important. If it could not export, it could not produce, which would have a big impact on things such as employment and investment.

Nick Evans travelled recently to Hong Kong as a guest of CITIC Pacific.

The West Australian

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