the last sentry at the gate

Mr Palmer, the founder of the Palmer United Party that could hold the balance of power in the Senate after July 1, and Citic are engaged in a long-running dispute over the payment of royalties from the Sino project to Mr Palmer's privately owned Mineralogy, which sold the original tenements to Citic. Among other contested matters between the parties are moves to unseat Mineralogy as the legal operator of Port Preston, a key infrastructure component of the Sino project and the first new iron ore port built in the Pilbara region in 40 years.

In a victory for Mr Palmer, Federal Court judge Stephen Rares yesterday ruled in favour of Mineralogy as the legal operator of the port, south of Karratha.

Last year, the federal government sidelined Mr Palmer and granted Citic the right to begin shipping iron ore concentrate from Cape Preston, overturning an earlier decision by the Department of Infrastructure and Transport.

Yesterday's ruling will force Citic, which started shipments last year, to deal with Mineralogy over port operations but it is unclear whether this has the potential to disrupt the already over-budget and long-delayed project.

Mr Palmer last night refused to answer questions on the potential implications of the judgment, saying he would not talk to The Australian.

In an earlier statement released after the court win, Mr Palmer said Citic seemed to "think they can take our resources without paying for them".

"Mineralogy stood as the last sentry at the gate protecting freedom of exploitation in Australia," the statement said. "Regardless of the cost to Mineralogy and my reputation, I have stood firm against these Chinese-owned companies. I will not stand by and see Australian interests raped and disrespected by foreign-owned companies.

"I predict this will be the first of many judgments to come our way in the next 12 months. Foreign-owned businesses operating in Australia must comply with and respect Australian law."

While Mr Palmer's attack came after the court victory, it also came after he had been sent a copy of an earlier speech by Mr Zhang to the Melbourne Mining Club, attended by 670 mining industry professionals.

Mr Zhang fired off a broadside at Mr Palmer, saying that Citic's preferred path was to resolve the dispute with Mineralogy away from the public spotlight. "It's fair to say though that there are some larger-than-life characters involved here and perhaps this was an unrealistic expectation," he said.

Asked by The Australian why relations with Mr Palmer had become so strained, Mr Zhang said: "That's a question I always ask myself."

He said he had met a lot of people over the years - including those during his previous 16-year stint in Australia - and in that time he had "never met such a person like this gentleman".

Citic paid Mr Palmer $415 million in 2006 for the rights to the magnetite (low-grade iron ore) deposits that underpin the Sino project, which shipped its first product to China in December after suffering huge cost overruns.

Mr Zhang confirmed that Citic had also started paying Mineralogy royalties covered by the Royalty "A" agreement. "Any claim that we haven't paid our fair share in accordance with agreements is just plain rubbish," Mr Zhang said.

Royalty "B" -- the second royalty stream due to Mineralogy - is in dispute because it was based on benchmark pricing mechanisms that no longer exit. "This was not a scenario foreseen in our original agreements. Regardless, it needs to be resolved," Mr Zhang said.

He said Citic had always complied with the law. "We welcome the intervention and protection of the Australian judicial system when necessary."

He said a takeout from the dispute with Mr Palmer was that companies needed to ensure a strong, respectful relationship with commercial counterparties. Achieving that meant when the unexpected occurred, "you can sit down, have a mature conversation and find a way through it".

clive has form in interests in holding port infrastructure..........

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