PERTH (miningweekly.com) – Australian miner Mineralogy this week issued a notice to deliver vacant possessions and cease occupation to Chinese major Citic, claiming unpaid royalties.

The 60 days’ notice was issued under the Western Australian Mining Act and would give Mineralogy exclusive rights to the Sino iron-ore project in Western Australia’s Pilbara region.

Under the Act, it would be a criminal offence for Citic to carry on mining the land without authority.

“Citic has continued to ship ore concentrate to China without paying in excess of $600-million [in royalties],’’ Mineralogy chairperson Clive Mensink said this week.

“Meanwhile, Citic has spent more than $12-billion developing infrastructure at the site and continues to splash out millions of dollars on public relations, lobbyists and lawyers in an attempt to abuse Australian processes.

“They have deliberately abused the Australian court system in an attempt to take the benefits of the contract without paying royalties.

“It is an abuse of legal process and legal equity, as well as being harmful to Australian/Chinese business relationships.”

A spokesperson for Citic has, meanwhile, said the company did not expect operations at the Sino project to be impacted by Mineralogy's notice, adding that the order had not been issued by a court.

“Mineralogy knows all too well that the question of any liability for Royalty B is yet to be considered by the Supreme Court of Western Australia. In the meantime, Mineralogy continues to receive payments for Royalty A," the spokesperson said, adding that the company also made regular royalty payments to the Western Australian government.

“We will continue to protect the interests of the project, our company and shareholders – ensuring Sino Iron reaches its full potential.”

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.

The two companies have been tangled in a legal broil for years, with claims and counterclaims from both sides.

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, while the 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.

Mineralogy at the end of August launched a $10-billion claim for damages against Citic in the Supreme Court of Western Australia.

However, reports emerged this week that Mineralogy had backed down from two appeals aimed at overturning orders to hand over key environmental approvals relating to the Sino project, and has agreed to cover at least part of Citic and the state government’s costs in preparing their cases for these appeals.

The appeals had been scheduled to appear before the Supreme Court of Western Australia this week.