Bitter feud behind Clive’s rant

Palmer United Party leader Clive Palmer has launched a tirade against the Chinese state-owned company CITIC Pacific, calling them 'bastards' and 'mongrels'. Courtesy ABC/QandA

Clive Palmer ranted against "Chinese mongrels" on television last night. Photo: Jono Searle. Source: News Corp Australia

CLIVE Palmer's public blow-up at the "Chinese mongrels" over the theft of Australian resources, seems to be inspired by a Pink Floyd songbook.

The mining magnate and Palmer United Party leader's appearance on Q&A last night prompted a strong response from government ministers today including Foreign Minister Julie Bishop, who told 3AW this morning that Mr Palmer should not be "venting his bitterness" on television.

Mr Palmer has accused the "communist Chinese government" trying to take over Australia's ports to steal the nation's natural resources but has clarified today that the comments were not in reference to "Chinese people".

So what was it all about? Money, of course.

MINING ROYALTIES

It is no wonder tensions are running high — the project that is causing all the fuss is Australia's largest magnetite mining and processing operation, the massive Sino Iron project.

Citic Pacific owns the $7 billion-plus project in partnership with China's state-owned Metallurgical Group Corporation.

The multi-billion dollar Sino Iron project which is the subject of numerous legal actions. Photo: Courtesy of Citic. Source: News Limited

The project is based in Western Australia's Pilbara region and Mr Palmer has granted the group a 25-year lease over his sprawling Australian Mardie Station cattle farm.

According to the Citic website, the project will generate about $111 billion in direct revenue to the Australian economy and $5.5 billion in royalties for Western Australia.

Citic paid $415 million to Mr Palmer's company Minerology to mine his land and also agreed to pay royalties on each shipment of magnetite, a type of iron ore that can be used to make steel.

But between signing the deal and the first shipment, iron ore pricing changed and this saw prices halve in five years. The two companies have not been able to agree on a new way to calculate the iron ore price and Citic has not paid royalties to Mr Palmer's company.

Zhang Jijing (left), president of Citic Pacific. Source: News Limited

The situation is complicated because of another unresolved dispute over $12 million of Citic's money allegedly being used for Mr Palmer's election campaign. The company has also raised concerns over Mineralogy's ability to operate the port where the resource is exported overseas.

PORT OPERATOR

Mr Palmer stood to make tens of millions of dollars after his company Minerology was appointed as the operator of Port Preston, which was built to ship the iron ore overseas.

Citic built the port and is the only company using it. But in January last year, the federal government approved Minerology as the port's operator. It eventually reversed this decision after Citic objected and the West Australian government, which owns the port, sought to remove Minerology as the port operator in February 2013.

Dispute over whether Minerology should be operating Cape Preston. Photo: Bruce Long Source: News Corp Australia

In response, Mr Palmer started legal action in the Federal Court in April to stop Citic from accessing the port.

A judge found in favour of Minerology following its challenge of the federal department's position.

An appeal is now being heard. As part of the legal action it was claimed that Mineralogy had been misleading the federal government by suggesting that it was operating the port facilities while Citic was only playing a minor role. However, during inspections, officers claim the opposite was found to be true.

MONEY USED FOR ELECTION

Citic has also accused Mineralogy of siphoning off $12 million from a business bank account that was supposed to be used for operating the port.

Mr Palmer is accused of personally signing two cheques, one for $10 million and another for $2.167 million, which drained the Chin­ese funds from a National Australia Bank last September.

The mining magnate has strenuously denied misusing the funds.

The $10m was allegedly funnelled into Cosmo Developments, a company controlled by Mr Palmer, in early August. The $2.167m went to a Brisbane agency, Media Circus Network that ran the Palmer United Party's 2013 election advertising campaign.

The $12 million was put back into the account after media reports were published. Mr Palmer has since been elected to parliament and has resigned as director of Mineralogy and Cosmo Developments.

Tony Jones, the host of ABC's live panel show Q&A asked Mr Palmer on Monday night if he could promise that "not a cent of that $12 million" went missing under his watch, but Mr Palmer refused.

"I can tell you that those allegations are not true … we will be taking immediate action in the Supreme Court," Mr Palmer responded. He is due back in court next week.

Successful campaign but was PUP's election advertising funded using Chinese money? Mr Palmer is pictured with his senators and Motoring Enthusiast senator Ricky Muir. AFP PHOTO/William WEST Source: News Limited

Mr Palmer also said: "We've had three judgments in the Federal Court and the Supreme Court of Western Australia and an arbitration against these Chinese mongrels — I'm saying that because they're Communist, they shoot their own people, they haven't got a justice system and they want to take over this country.

"And we're not going to let them," he added.

"The Chinese government wants to bring workers here to destroy our wage system ... they want to take over our ports and get our resources for free.

"So far they've shifted $200 million worth of iron ore out of this country without paying for it. I don't mind standing up against the Chinese bastards."

Treasurer Joe Hockey said Mr Palmer's extraordinary televised tirade was hugely damaging for Australia and that the mining magnate had been a big beneficiary of Chinese investment in Australia.

"He is in a very obvious legal dispute with his Chinese partners but I'd say to Mr Palmer, please don't bring down the rest of Australia because of your biases."

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