Palmer reaps $3bn from WA project

Clive Palmer’s private company has posted a bumper annual profit of $276 million as he continues to benefit from a lucrative royalties deal on a Pilbara iron ore project.

Brisbane-based Mineralogy lifted net profit by 29 per cent for the year to June 2022, accounts lodged with the Australian Securities and Investments Commission show.

This reflected a big jump in revenue to $737 million.

The main contributor was royalties, up 12 per cent to $520 million.

The royalties come overwhelmingly from CITIC Pacific Mining’s Sino Iron project in the Pilbara, based on a 2005 deal under which the Chinese group mines tenements owned by Mineralogy.

A recent Supreme Court ruling disclosed that CITIC had paid $2.5 billion to Mineralogy up to February 2022.

With royalties coming in at the rate of more than $1.4 million every day, the total would have increased to about $3 billion by now.

In addition, Mineralogy has disclosed it made a $204 million gain during FY22 on the sale of project company Balmoral Iron to CITIC.

That deal gave CITIC rights to extract a further 1 billion tonnes or iron ore.

On top of all these payments, Mr Palmer is seeking additional money from CITIC.

The recent Supreme Court ruling disclosed Mr Palmer had written to CITIC suggesting it should pay him $750 million for access to additional land it wants to support the project’s operations.

That was described by CITIC’s counsel as a ransom demand while Judge Kenneth Martin suggested it was an opening gambit delivered with “a high level of accompanying bravado”.

He added that the claim should be judged in the context of CITIC’s estimated $12 billion investment to establish the Sino Iron project and the revenue it now produces.

“Given all that, the amount of $750 million does not present to this court as being outlandishly out of place in a robust negotiation between commercial heavyweights,” he said.

Mineralogy’s accounts reveal the company has paid $700 million in dividends in the past 18 months.

Its FY22 profit was affected by several non-cash accounting adjustments, including a $150 million loss on a 'payment swap instrument'.

Its largest operating expense was $117 million of ‘donation and advertising expenses’, up from  $5 million in the prior year.

This is likely to be spending on election campaigning by Mr Palmer’s United Australia Party.

It also had ‘administrative’ expenses of $67 million and employee costs of $24 million.

The company said it had 280 employees.

In a listing of principal activities, the first item was mineral exploration, yet its exploration expense in FY22 was a modest $3.6 million.

The directors of Mineralogy comprise Mr Palmer, his wife Anna Palmer, company secretary Baljeet Singh and former Perth accountant and corporate adviser Domenic Martino.

Mr Palmer’s daughter Emily resigned as a director in August 2021 after just three months on the board.