Just a few months ago, Mr Clive Palmer’s representatives unsuccessfully argued in the mining warden’s court that his private company Mineralogy was so “starved” for funds it couldn’t afford $50,000 to meet the conditions of a mining lease in Western Australia.
How interesting, then, that Clive Palmer chooses to ‘warehouse’ his Pilbara tenement, which could generate revenue in the millions of dollars from royalties alone. Mineralogy has held the license for the Pilbara tenement since 2013 and is obliged by contract to spend $50,000 a year on mining it, which it continuously fails to do.
The Australian Mining Act aims to ensure a tenant unable to exploit mineral resources, much as is the case with Palmer in the Pilbara, should give way to someone else, not “go to sleep” on their rights and obligations; yet Mr Clive Palmer is doing what’s referred to in the industry as ‘warehousing’, squatting or parking – essentially sitting on an exploration tenement to stop others using it.
There is currently a $10,000 penalty for such behaviour under The Mining Act, but Warden John O’Sullivan believes the penalty is not a deterrent for large companies and billionaires. He recently recommended that Mining and Petroleum Minister Bill Johnston grant an application for Mineralogy to forfeit the licence on its Pilbara tenement.
And he isn’t the only one asking for Mineralogy’s lease to be revoked; another miner, Leichardt Industrials, applied for Mineralogy to have to forfeit the licence after it failed to develop the tenement as required by the contract in the 2016 reporting year.
Now, Mr Palmer’s witness tries to claim in court that Mineralogy had been “starved of considerable funds that may have been used to explore and improve its existing tenements” because of a contract dispute in the Supreme Court with CITIC and subsidiaries Sino Iron and Korean Steel.
However, this doesn’t ring true; Mineralogy had plenty of cash coming in in 2017 when the court decided in favour of Palmer and instructed CITIC to pay Mineralogy almost $279 million. It seems Mr Palmer’s company had funds to explore the tenement but simply failed to do so.
“Perhaps I could suggest to you that the company is a very wealthy one, that it has simply given no priority or ascribed no priority to this tenement?” asked Warden O’Sullivan. As the Warden later noted, Mineralogy also provided no evidence of its financial position.
The tenement in question is required for the continued operations of the Sino Iron project in the Pilbara, run by Chinese conglomerate CITIC. Without it, works at the site could stop completely, leaving some 3000 workers and miners without jobs. Palmer has been urged to allow CITIC to use the tenement for a tailings dam for the benefit of Sino Iron, most recently by WA premier Mark McGowan. Nonetheless, Palmer refuses to accede to the requests.
Mineralogy’s legal counsel argued Mr Palmer intended to spend $100,000 in the current reporting period and even had a plan to explore and develop the tenement as part of a larger project. But under cross-examination the counsel could not say that any money had been specifically earmarked for the project and confessed there was no drilling program or any instructions from Mr Palmer on a plan and that there were only “some notes”.
The Warden recommended Mines Minister Bill Johnston grant an application to forfeit the license. The application has not yet been received. Perhaps it is time for premier McGowan and the Federal Government to intervene further in order to save Sino Iron from a dismal fate.
McGowan has hinted at the possibility of altering the State Agreement covering the Sino Iron project in the Pilbara in November 2018 but faced massive backlash from a dissatisfied Palmer. Still, McGowan and his government should keep in mind that if Sino Iron does not continue to operate smoothly, they will have to answer to 3,000 Sino Iron workers and their families.
If he truly is warehousing the tenement in the Pilbara, now could be the right time to revoke Palmer’s lease.