Palmer dispute throttles Sino Iron project

China's biggest conglomerate warns its bitter dispute with Clive Palmer's Mineralogy poses a threat to the future of its multi-billion dollar iron ore mine in WA, which employs 2600 workers and contractors.

Hong Kong-listed CITIC Ltd says it may have to suspend operations if the pending outcome of a civil trial over the calculation of iron ore royalties, heard in June, favours the tenement holder Mineralogy.

"We are doing everything within our power to avoid this undesirable outcome," CITIC said in its report for the six months to June 30 on Tuesday.

"However, the potential risk is real.

"When we embarked on this journey, we expected to have the support and co-operation of Mineralogy.

"Unfortunately, this has not been the case, and it is our firm view that Mineralogy's unco-operative and adversarial approach poses a threat to the future of Sino Iron."

The high-cost magnetite producer also warned it was particularly susceptible to sustained lower iron ore prices, which could make the project unviable, and complained Mineralogy had refused to co-operate in obtaining government approvals for the mine's future.

That will cause CITIC to run out of waste and mining refuse storage space in the near future, the company says.

"This will severely constrain operations and impact Sino Iron's sustainability."