July 18 (Bloomberg) -- Clive Palmer, the Australian mining entrepreneur seeking to become the next Prime Minister, is fighting with the tax office over the sale of the biggest magnetite iron ore project in the country.
Palmer, who sold his Sino Iron Pty unit to Citic Pacific Ltd. in 2006 for $215 million, recorded capital gains of A$261 million ($239 million) that year and A$38 million in 2007, according to a court filing by his mining company Mineralogy Pty that was made public today. Palmer now wants the assessments for the two years set aside, saying subsequent calculation have shown he had incurred a loss of A$7.3 million instead and wasn’t liable for any taxes.
Citic Pacific, controlled by China’s biggest state-owned investment company, is building the $8 billion Sino Iron project in Western Australia. The development has been beset by problems, including a more than four-fold increase in its budget and wrong-way currency bets that cost the company HK$14.6 billion ($1.9 billion) in 2008.
Palmer also attempted to kick Sino Iron off the project earlier this year, claiming in a lawsuit filed in Perth that its mining rights and site-lease accords should be ended for failing to pay royalties. He backed off that claim and a judge decided he didn’t need to rule on the issue. Palmer and Sino Iron remain in a dispute over how much in royalties Palmer is owed.
Sino Iron, in 2006, agreed to pay 30 Australian cents a metric ton of mined ore and between 6 percent and 10 percent on the total aggregate tons produced, based on the prevailing ore price, according to the court documents released today. Sino is allowed to produce 12 million tons of iron products annually, with a lifetime limit of 1 billion tons, according to the agreement.
The documents were released today by Federal Court Justice Richard Edmonds over objections from Richard Schulte, representing the Commissioner of Taxation, who said they should remain sealed. Mineralogy’s lawyer Bradley Jones didn’t object to the release of the documents in the lawsuit, which was filed May 29.
Palmer has created the Palmer United Party, which says it will run candidates in all Australian districts in the next federal election, to be held later this year. He had said he hopes to be the next Prime Minister.
The case is Mineralogy Pty v. The Commissioner of Taxation of the Commonwealth of Australia. NSD952/2013. Federal Court of Australia (Sydney).
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