News

CITIC Limited and its subsidiaries Sino Iron Pty Ltd and Korean Steel Pty Ltd have commenced legal proceedings in the Australian Federal Court against Mineralogy Pty Ltd and Clive Frederick Palmer to compel the approval and submission of proposals critical to the operation of the Sino Iron magnetite project, south of Karratha.

As a key party to the State Agreement governing the project, the State of Western Australia has also been required to be represented in the action.

With all six processing lines now commissioned and more than 50 million wet metric tonnes of concentrate shipped since 2013, Sino Iron has reached a stage where further approvals are required to permit mining and processing operations to continue.

Additional sub-lease tenure is also required for project infrastructure, including areas to accommodate necessary expansion of waste rock and tailings storage facilities. CITIC has prepared proposals setting out the proposed activities and describing the proposed expanded project area (the Mine Continuation Proposals).

However, Mineralogy has withheld its approval for the Mine Continuation Proposals and declined to join with CITIC subsidiaries in submitting the proposals to the State, despite repeated requests from CITIC since 2016.

CITIC Pacific Mining Chief Executive Officer Chen Zeng said:

“It’s our firm view that Mineralogy’s ongoing failure and refusal to submit the proposals and take the other steps requested of it has caused, is causing and will continue to cause loss and damage to CITIC subsidiaries. Initially this has led to significant increased costs in planning, developing and operating the project. The ultimate effect will be a substantial reduction in the scope of operations of the project. It may result in the suspension of those operations.

“We’re taking this action in the interests of shareholders, our dedicated local workforce and vendors and the wider Western Australian community.

“Having achieved so much, we’re committed to doing everything possible to secure the project's long-term future.”

With a direct and indirect workforce of close to 3000 people, Sino Iron is now the largest seaborne supplier of high-grade magnetite iron ore concentrate to China – pioneering a new downstream processing industry for Australia.

Background:

The Sino Iron Project mines magnetite iron ore from a mine near Cape Preston in Western Australia. The ore is then processed into concentrate, which is exported from the Cape Preston port.

The project derives its licence to operate from an agreement with the State of Western Australia (the State Agreement). The parties to the State Agreement include Mineralogy, Sino Iron and Korean Steel. The project is located on land held under mining tenements by Mineralogy, and sub-leased to Sino Iron and Korean Steel. Construction and ongoing operations are carried out by Sino Iron and Korean Steel, through CITIC Pacific Mining Management Pty Ltd (CPMM).

Activities under the State Agreement can only be carried out if proposals setting out details of those activities have been submitted to and approved by the State. All proposals for this project have to be submitted jointly by Mineralogy and one of the co-proponents (Sino Iron or Korean Steel). The State Agreement does not allow Sino Iron and Korean Steel to submit proposals to the State without the cooperation of Mineralogy.

The original suite of proposals for the project were submitted and approved in 2008-2010. These proposals covered the first five years of mine life, and specifically stated that further proposals would be submitted to enable the mine and processing plant to continue through the full 30 years+ mine life.

The CITIC parties contend that Mineralogy is legally obliged to approve the Mine Continuation Proposals and make available additional sub-leased land, to enable the Project to continue. In the face of Mineralogy’s continuing failure to comply with these obligations, the CITIC parties have been obliged to commence legal proceedings to enforce Mineralogy’s obligations.

ENDS

About CITIC Pacific Mining

CITIC Pacific Mining (CPM) is developing the Sino Iron magnetite project, 100km south of Karratha. Sino Iron represents a new downstream processing industry for Australia, transforming magnetite ore into a premium concentrate for export, delivering major socio-economic benefits in the coming decades. For more information, please visit www.citicpacificmining.com.