PERTH (miningweekly.com) – Australian miner Mineralogy has launched yet another court battle against Chinese government-owned Citic, this time launching a $10-billion claim for damages in the Supreme Court of Western Australia.

“The simple fact is that Citic continues to export iron-ore concentrate from Western Australia and refuses to pay Mineralogy the royalty, which even Citic announced to its shareholders was the commercial basis of Mineralogy granting Citic its right to mine two-billion tonnes of magnetite iron-ore on Mineralogy mining leases,’’ Mineralogy chairperson Clive Mensink said on Monday.

Mineralogy and Citic have been involved in an endless tug-of-war over the Sino iron-ore project and its associated infrastructure, in Western Australia.

Mineralogy leased the Sino iron-ore mine site to Citic, which acquired the right to mine two-billion tonnes of magnetite ore in the Pilbara from Mineralogy, between 2006 and 2008. During 2012, the company exercised its option to acquire the right for another one-billion tonnes.

However, in 2012, Citic received notices from Mineralogy alleging that terms in the mining right and site lease agreement had been breached, with Mineralogy maintaining that it was entitled to a royalty payment of 3c/t of all materials taken from the mine area, including waste material.

“By repudiating the commercial arrangements, the Citic companies are liable to pay Mineralogy damages equivalent to the value of the rights Citic has repudiated,” Mensink said on Monday.

“While Citic’s wholly owned subsidiaries in Western Australia are currently subject to Western Australian court proceedings, Citic Limited provided guarantees to Mineralogy on the performance of its subsidiaries.

“Citic Limited is being sued under those guarantees,’’ he added.

Mensink said the action called into question the reliability of Citic’s guarantees in any transaction if they were subject to political or strategic considerations unrelated to the obligations themselves.

He further noted that Citic had failed to meet other financial obligations owed to Mineralogy in what seemed to be “a deliberate strategy to gain control of Australian resources without having to pay for them”.

The latest claim for damages was just one of the many legal volleys between Mineralogy and Citic since 2012.

In August, a Federal Court dismissed Mineralogy’s efforts to terminate Citic’s right to export iron-ore from the Sino project through the port at Cape Preston.

Mineralogy had claimed that Citic was in breach of an agreement with the Australian miner to hand over control of port facilities, once they were built and, in keeping with its insistence that Citic was operating unlawfully, Mineralogy had issued four termination notices to the Chinese miner.

In his ruling, Justice James Eldeman permanently restrained Mineralogy from acting on the termination notices and found that Mineralogy’s claims that Citic had breached agreements were “without any substance”.

Further, a Queensland Supreme Court in May dismissed claims by Citic that mining magnate and Mineralogy founder Clive Palmer had misappropriated some A$12-million from a port fund associated with the Sino iron-ore project.

“Palmer regularly makes all sorts of claims against a host of people and organisations. This is yet another claim lodged by his companies since the Federal Court dismissed Mineralogy’s attempt to terminate key port agreements at the Sino Iron project. Like the other claims, it overlaps matters being addressed in other proceedings,” a Citic spokesperson told Mining Weekly Online, pointing out that this was the third action that Palmer had lodged since the Federal Court ruled on the port possession issue.

He added that the company was looking forward to having the validity of the latest claims scrutinised by the courts and would continue to protect the interest of the Sino project, the company and its shareholders.

“In the meantime, export operations are unaffected and we’re focused on ensuring the project reaches its full potential.”