* CITIC Pacific files injunction on Clive Palmer's Mineralogy
* Mineralogy seeking to terminate agreement over disputed royalties
* Sino Iron project plagued by delays, cost blowouts
SYDNEY, Nov 20 (Reuters) - China's CITIC Pacific has filed a court injunction against Australian tycoon Clive Palmer over disputed royalties at the $8 billion Sino Iron project in Western Australia, the latest in a long list of hurdles for the troubled mine.
The project, China's largest foreign mining investment, is one of a number of Australian resource developments that have suffered from cost overruns and delays due to a shortage of skilled labour and higher prices for equipment and construction materials.
The latest dispute relates to the start date for the payment of hundreds of millions of dollars in royalties to Palmer's private investment company Mineralogy Pty Ltd by the mine's Chinese developers.
However, it does not threaten to slow work on the project, according to a source with knowledge of the impasse. Analysts also said the injuction was unlikely to hurt the project.
"We don't expect the issue to impact the mine's production and construction," stockbroker Jeffries, which has a "buy" recommendation on CITIC Pacific, said in a research note.
Palmer told Reuters in August that Mineralogy would receive up to $500 million per year in royalties once the mine was in full production and yielding 24 million tonnes of iron ore a year, making it Australia's fourth-largest producer.
A joint venture between CITIC Pacific and Metallurgical Corp of China Ltd, Sino Iron was set up in January 2007 after Palmer sold CITIC Pacific rights to mine 3 billion tonnes of iron ore for an upfront fee and a percentage of royalties.
Sino Iron was expected to ship its first ore in 2010 to Asian steel companies, which are eager to reduce their reliance on heavyweight miners Rio Tinto and BHP Billiton . But the mine has yet to ship any ore and is still conducting trial production runs.
In a statement to the Hong Kong stock exchange late on Monday, CITIC Pacific said Mineralogy was trying to terminate the mining and site lease agreements at the project, arguing that the terms had been breached and the agreements repudiated.
"CITIC Pacific has gone through a disciplined process to review the notices and strongly refutes such allegations as they are without foundation," it said.
CITIC had filed injunctions to prevent Mineralogy taking such action in the Supreme Court in Western Australia state.
A spokesman for Mineralogy said the dispute centred on extraction royalties payable by CITIC Pacific, with the agreement referring to payments due when ore was taken.
"We believe 'taken' means when it's taken from the mine site; CITIC believes it means when it is exported," he said.
A spokesman for CITIC Pacific said the Chinese company interpreted the agreement differently.
"Mineralogy claims that it should have been paid royalty during the development phase of the project. CITIC Pacific considers that its obligation is to pay Mineralogy royalty when production begins," the spokesperson said.
Palmer, a former real estate developer and law school dropout, is known for his litigious behaviour.
His plans to hold a New York gala Dec. 4 to unveil details of his project to build a replica of the Titanic were delayed in the aftermath of Hurricane Sandy, which pummelled the U.S. northeast in late October.
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