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Australian billionaire Clive Palmer is in a contract dispute with Citic Pacific. The news comes amidst Australia’s ongoing struggle with the iron ore market.
Iron ore prices have been in a funk recently, and news out of Australia has done little to help the metal’s progress this month.
The latest dispatch concerns Clive Palmer and a dispute with China’s Citic Pacific. According to the Sydney Morning Herald, Palmer is trying to call off a partnership between his company, Mineralogy, and Citic Pacific. Citic Pacific operates Mineralogy’s Sino project, a roughly $10-billion iron ore mine in Western Australia.
The partnership has been plagued with trouble ever since Citic purchased the site eight years ago. Palmer alleges Citic Pacific failed to make it known that it had been served with a series of defaults. In return, Citic Pacific alleges Palmer misused funds set aside for port operations on his election campaign.
The Sino project is one of China’s largest overseas investments, and Citic paid $415 million to acquire the rights to the project; royalties headed to Mineralogy once production started.
Reuters reports that an Australian court has blocked Palmer’s attempts to terminate the partnership, scheduling a second hearing for December 18.
The news comes amidst Australia’s ongoing struggle with the iron ore market. Low iron ore prices have taken a bite into companies’ revenue, with several starting cost-saving initiatives. Both Atlas Iron (ASX:AGO) and Cliffs Natural Resources (NYSE:CLF) have supposedly laid off workers in an attempt to claw back some money.
Asia Iron has also put its Extension Hill project on ice over concerns in China about financing overseas projects, with particular attention on iron ore projects.
“With the current economic outlook, low iron ore prices and the estimated timeline for securing project financing being extended, the AIA Board have placed the Extension Hill Magnetite Project in a ‘Holding’ pattern until financing approvals can be achieved,” reads a statement from the company.
Iron ore is estimated to hit $94.30 per tonne in 2015, and over the course of the next five years should average between $90 and $95 per tonne, a far cry from its heady days of triple-figure pricing. At market close Friday, iron ore was hovering at $92.76 per tonne.
Company news
Last Monday, Baffinland Iron Mines announced workers at the Mary River iron project had transported the mine’s first load of iron ore to its port site. The Mary River iron project operates on Baffin Island, Nunavut, with a goal of producing 18 million tonnes of iron ore per year.
“I am extremely pleased to say that we are now truly a mining company; we have drilled, blasted, crushed and transported final iron ore product to the port at Milne,” said Tom Paddon, Baffinland’s president and CEO, in a press release.
Baffinland is co-owned in a 50/50 split by ArcelorMittal (AMS:MT) and privately held Nunavut Iron Ore.
Labrador Iron Mines (TSX:LIM) reported positive drill results last week from its $5-million exploration program on the Howse deposit. Of 19 holes drilled, 17 returned ore-type intersections. Hole HW-DD14-05 returned 84.1 meters grading 65.9-percent iron and HW-DD13-01A returned 79.5 meters grading 64.52-percent iron. The project is run by both Labrador and Tata Steel Minerals Canada, which holds a 51-percent interest in the property.
According to the release, the results will form part of a preliminary economic assessment to be completed in early 2015.
Securities Disclosure: I, Nick Wells, hold no investment interest in any of the companies mentioned.