Citic downplays termination notice on Sino Iron project
China’s Citic Limited, formerly known as Citic Pacific, has played down a termination notice on its mining rights in the Sino Iron project in Western Australia issued by its Australian partner, Mineralogy Pty.
Mineralogy disclosed it had given a 21-day notice saying Citic’s right to mine ore at the Sino Iron project would be terminated – a threat that the Chinese company has promptly minimised.
“It is surprising that Mineralogy would take this action when the WA [Western Australia] Supreme Court is scheduled to hear an application at 3:30pm [Perth time] today for an injunction restraining Mineralogy from taking further steps in reliance on these and other notices issued by Mineralogy,” Citic said in a filing with the Hong Kong Stock Exchange on Friday September 26.
“Citic looks forward to this matter being resolved by the court,” it said.
Queried by Steel First, Mineralogy refused to provide or confirm their statement, which Citic called a “media release” distributed by the Australian miner early on Friday.
Production of magnetite concentrate at Sino Iron started in late 2012 and the first shipment was sent to China in 2013.
The much-delayed commencement of the project was related to environmental, labour and technical obstacles, as well as costs which spiraled to four times the initial budget.
The delay is also at the heart of the dispute with Mineralogy, which argues that it is due royalties when ore is mined. Citic believes the royalties should be paid when ore is exported.
“In addition to the $415 million paid by Citic to Mineralogy to acquire its rights at the Sino Iron Project, all royalties that are owed and calculable have been paid in full by Citic to Mineralogy," the Chinese company said on Friday.
It also noted that Mineralogy has been restrained by the WA court “not to rely on several default and termination notices on three separate occasions over the past two years”.
The Sino Iron project is the largest single investment in Australia made by China and is also China’s largest resources investment globally.