19/04/2021 - 16:31

Court to hold cash in Tianqi, MSP battle

19/04/2021 - 16:31

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Tianqi Lithium has lodged $39 million with the state’s courts after a stay on payments to contractor MSP Engineering was granted, as Tianqi awaits an appeal over a March ruling.

Court to hold cash in Tianqi, MSP battle
The Tianqi plant under construction. Photo: Attila Csaszar

Tianqi Lithium Australia has lodged $39 million with the state’s courts after a stay on payments to contractor MSP Engineering was granted, as Tianqi awaits an appeal over a March ruling.

The two companies have been locked in a dispute over construction of the Kwinana lithium refinery, which was paused in 2019.

Tianqi’s Chinese parent company had financial troubles, while there were delays during the building of two processing trains at the Kwinana facility.

In March, Business News reported Tianqi was ordered by the Supreme Court to pay $38.8 million to MSP Engineering, which had been the lead contractor on the project.

But it was understood at the time that Tianqi would apply for a suspension of the order, while it was also pursuing a $220 million counterclaim against MSP.

That counterclaim is separate, and will take place through an arbitration process.

The latest decision by the state's Court of Appeal, published today, was that Tianqi would put the money on trust with the court pending an appeal.

The court said there was a risk MSP may disperse the judgement cash as dividends before the appeal was finalised, adding that the company appeared to have wound down operations and liquidated much of its assets.

But there was also a concern that Tianqi’s financial position may worsen to the point it was unable to pay the judgement debt if the cash was not secured now.

Ongoing 

Tianqi said in a release today that delays in the construction of the Kwinana lithium refinery would cost the state and federal governments about $97 million in state and company tax revenue between 2019 and 2023.

First production at the plant was delayed from 2018 to the end of 2021 because of issues with construction, Tianqi said.

Most of that $97 million would have flowed to the federal government, with royalty payments to the state expected to have measured about $16 million, Tianqi said.

Tianqi Lithium Kwinana acting general manager Raj Surendran said that figure did not include losses from the second train or other flow on effects.

“Due to the problems incurred during MSP’s construction of the Kwinana Lithium Hydroxide plant, the WA Government and Federal Government, and therefore Australian taxpayers, will be more than $97 million worse off due to the loss of royalties and company tax alone,” Mr Surendran said.

“Tianqi is currently incurring millions of dollars a month in holding costs to maintain the plant, this includes care and maintenance, workforce, services and rates. 

“That spend will increase soon when we award contracts to local suppliers to accelerate rectification and commissioning works at the plant.”

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