Clive Palmer has dropped plans to force Chinese-owned CITIC Pacific into bankruptcy.
Palmer had claimed the firm owed his company Mineralogy $12 million in administrative costs and filed a court application to have CITIC-owned Sino Iron placed into liquidation for the non-payment of funds.
However the validity of the wind up order was questioned by Justice John Gilmour in Perth hearing last week, forcing Palmer to withdraw the application before a second sitting yesterday.
“That’s not a basis for winding a company up,” Gilmour said.
The fact a debt remains unpaid “isn’t proof that Sino is unable to pay its debts,” the judge said.
Mineralogy agreed to pay the legal costs of the Sino Iron.
“We welcome Mineralogy’s change in position,” Citic Pacific said in a statement yesterday.
CITIC Pacific and Palmer’s company are involved in a long-running battle relating to project development at Cape Preston and royalties for the Sino Iron magnetite mine in the Pilbara.
The $10 billion magnetite project has been built on tenements originally owned by Mineralogy, and the relationship between the two companies soured over the issue of mining royalties. That case is continuing.
Last week CITIC president Zhang Jijing said the dispute was being watched by other Chinese companies, warning investment could suffer as a result.
Earlier this month Palmer accused Chinese miners of 'raping' Australia's resources.
He stated that Jijing has threatened legal action against him.
"I have denounced CITIC Pacific’s behaviour as disgraceful and dishonourable,” Palmer said. “I felt compelled to warn all Australian companies to be careful when using a foreign partner because the chairman of CITIC Pacific seeks to corrupt our legal and political system.”
He added that it is illegal for Zhang to use CITIC's lawyers to undertake a personal claim against him.