Cashed-up Palmer turns hand to investment banking

Clive Palmer has unveiled plans to set up an investment bank that would focus on projects in resources-rich Western Australia where he is earning hundreds of millions of dollars a year in royalties from Chinese conglomerate CITIC.

Mr Palmer has begun hiring staff after renting prime office space overlooking the Swan River in Perth and is looking to have the bank up and running by next year despite his myriad of legal battles, including with CITIC and the WA government over access to land controlled by his private company Mineralogy.

The cashed-up billionaire said he would look to bankroll large scale resources and technology projects for Australian companies with an emphasis on WA.

“We think there’s social obligation to put something back into WA and we also think there are good business opportunities here that Australians are losing out on,” he said.

Mr Palmer said Mineralogy would look at mezzanine funding, cornerstone investments, joint ventures and buy outs as part of its push into WA, where he has purchased a riverside home and is spending more and more time.

“I think we’ll be pretty well set by 2021, not just from CITIC (royalties). We’ve got other things we are doing, we’ve got no debt, we don’t have obligations to anyone,” he said.

“The money that I’ll be investing will be my money. It won’t be the public’s money.”

With the iron ore price remaining strong in the face of coronavirus, Mineralogy is estimated to be earning about $500 million a year in royalties from CITIC’s Sino Iron operations in the Pilbara.

Mr Palmer has seized on latest profit and production figures from one of CITIC’s steel making divisions to reject claims from WA premier Mark McGowan and CITIC chairman Chang Zhenming that he is putting Sino Iron at risk of shutting down.

A March update from CITIC Pacific Special Steel Group, which uses product from Sino Iron, said it had doubled net profit year-on-year to 5.4 billion yuan ($1.29 billion).

CITIC Pacific Special Steel Group told the Shenzhen Stock Exchange it produced 14.09 million tonnes of crude steel in 2019. It plans to increase production to 14.45 million tonnes this year regardless of the coronavirus outbreak which seems to have peaked in China.

Mr Palmer said on Wednesday that he donated $1 million to the Royal Brisbane and Women’s Hospital to help in the race to develop a drug to treat COVID-19.

“At this time of national crisis in our country all Australians must do whatever they can to help their fellow Australians,’’ he said.

Sino Iron shipped just over 20 million wet tonnes of magnetite concentrate from Cape Preston, about 100 kilometres south of Karratha, in 2019, making it the largest seaborne supplier to China.

It is understood the majority of the magnetite went to non-CITIC related steel mills. CITIC is standing by its warnings that Sino Iron is at risk of shutting down unless Mineralogy agrees to make more land available.

Mineralogy controls undeveloped mining tenements adjacent to CITIC’s $US12 billion ($19.7 billion) integrated magnetite export operations, which are covered by a state agreement allowing third-party port access.

Mr Palmer said he remained willing to negotiate with CITIC and had met one of its top executives at his Perth offices last month, but it wanted Mineralogy to hand over extra land for free.

“CITIC is making massive profits out of WA iron ore but they don’t want to have a commercial negotiation. They would like us to give them, for free, some of our assets,” he said.

Mr Palmer claims CITIC wants to add vast tracks of land to its existing 50 square kilometre footprint and soak up areas portside at Cape Preston so it cannot be used for export by other miners.

He said Mineralogy had talked with companies interested in the undeveloped tenements and using Cape Preston, but progress was being held up arbitration with the WA government in relation to the state agreement.

CITIC and its subsidiaries Sino Iron and Korean Steel have launched legal action in the Federal Court against Mineralogy and Mr Palmer “to compel the approval and submission of proposals critical to the operation of the Sino Iron magnetite project”.

Although it backs CITIC in the dispute with Mr Palmer, WA’s Labor government has been dragged into the action as a key party to the state agreement governing the project.

CITIC, which is targeting annual production of 24 million tonnes a year, has said Sino Iron is at a stage where further approvals are required for mining and processing operations to continue.

It argues additional sub-lease tenure is required for project infrastructure, including areas to accommodate necessary expansion of waste rock and tailings storage.

Last month, Mr Palmer scored a major legal victory when the High Court threw out CITIC’s application to challenge a Supreme Court ruling from 2017 which cleared the way for Mineralogy’s royalty riches.