Clive Palmer’s millions may not have bought him a seat in Parliament, but the eccentric billionaire is still firing political barbs across the nation.

This time his target is not Canberra, but Western Australia, where, on the back of his election defeat, he claimed a legal victory over his Chinese business partners.

But hours after the WA Supreme Court ruled CITIC Pacific Mining must pay Palmer millions in past and future royalties from Australia’s largest iron ore project in WA, the mining magnate took aim at the state’s premier Mark McGowan.

Palmer’s weapon of choice was an online video, published on Vimeo and disseminated on social media, accusing the WA Labor government of wanting to change the law to favour a communist Chinese government-owned company over an Australian one.

“Chinese communist, government-owned companies should not be allowed to destroy Australian companies or take their property,” Palmer states in the video.

“Public officials need to be loyal to Australia and their oath of office and protect the rule of law and our democracy.”

While the video’s message was simple, the real story has more twists and turns than a Hollywood disaster movie.

At the heart of the offensive is a low-grade iron ore, called magnetite, buried beneath WA’s Pilbara region.

In 1985 Palmer’s company Mineralogy purchased mining tenements near the rocky Cape Preston headland, about 1500km north of Perth and 100km south-west of Karratha and an area that is home not only to the Indigenous Nhuwala people, but also large reserves of magnetite.

The magnetite is blasted from the Cape Preston ground, crushed, milled and separated before being turned into concentrate by CITIC Pacific Mining and shipped to China’s steel makers.

According to court documents, two decades after Palmer purchased his Pilbara tenements, he struck a deal with the mining arm of an $88bn Chinese-owned conglomerate called CITIC Group, giving it the rights to development and mine in the area, called the Sino Iron Project, which has a lifetime export earnings projection exceeding $100bn.

It was a win-win. Palmer provided the foreign company an investment opportunity in Australia’s lucrative iron ore market for the promise of a river of royalties flowing into Mineralogy and the WA Government’s purses.

Fast forward more than a decade and both sides are beating a path to the courtroom rather than the bank, with half a dozen lawsuits filed and the livelihoods of 3000 West Australians on the line.

The fight just got political

The issue now is that extracting iron ore from magnetite is a dirty process that generates three tonnes of waste for every tonne of ore – and CITIC’s dump is full. The company needs WA government approval for more room to mine, store waste and to expand its tailings dam.

The WA government requires Mineralogy to sign off on any expansion application, but Palmer wants millions of dollars for his sign-off, and now McGowan says the government is “examining its options” in the dispute because he says it’s threatening local jobs and risking foreign investment.

“We urge Mr Palmer to resolve the issue of waste disposal immediately,” a spokesman for McGowan says.

“His ads are highly misleading and he is a threat to jobs, in particular mining jobs in Western Australia,” McGowan told a media conference this week.

“There are 3000 West Australian families whose livelihoods he is directly threatening.”

Palmer did not respond to multiple emails and phone calls from Guardian Australia.

But a CITIC Pacific Mining spokesman says the company has been asking for Palmer to sign off on the expansion since 2016.

In October last year, Palmer placed a $750m price tag on his signing the agreement.

CITIC responded by suing Mineralogy and Palmer in Federal Court for “unconscionable conduct” and seeking changes to the terms of the sublease and damages – leaving him potentially liable for billions in claims.

Days later, Mineralogy launched a separate legal case before the WA Supreme Court claiming CITIC should have invested $500m into a rehabilitation bond for the project.

Money in rehabilitation funds are used to help fix the environment and safety issues and the WA Mining Act 1978 puts the responsibility of the bond on the tenement holder.

McGowan’s spokesman said site remediation was a matter for CITIC Pacific and Mineralogy.

In State Parliament on May 7, McGowan labelled Palmer a “greedy hypocrite”.

“He is running a disgraceful attack on our biggest trading partner,” McGowan told Parliament.

“Mr Palmer takes and does not give. He does not pay his workers. He rips off Aboriginal people. He is threatening Western Australian jobs. He has moved his company to Singapore …” McGowan told state parliament on May 7 before opening fire on him again 10 days later.

“It is no understatement to say that Mr Clive Palmer is running one of the most disgraceful and deceitful campaigns in Australian political history,” McGowan said to State Parliament on May 17.

“He is spending tens of millions of dollars, made off the backs of workers he has not paid, in deceiving the public of this country.”

On May 17, Palmer won the right to have the conduct case against him heard in the WA Supreme Court. Four days later, in yet another case, WA Supreme Court Chief Justice Wayne Martin ordered CITIC to pay Mineralogy almost $150m in unpaid royalties that he has been fighting for since 2017.

At current production rates and ore prices, the decision to uphold a ‘Royalty B’ clause in Mineralogy’s contract with CITIC, will leave Palmer $100m richer every quarter, experts say.

WA Greens mines member Robin Chapple says the litigation is all about maximising profits.

“Major corporations very often are less enthusiastic about paying their right dues because it’s money in the bank,” Chapple says.

Palmer used the decision as a springboard to put pressure on McGowan, labelling talk of his intervening in the waste management issue as “ridiculous”.

Waste piling up

While the debate rages on, trucks rumble round the clock at Sino Iron Project as workers build a wall so the company can continue to deal with its mounting pile of waste.

But the waste cannot be piled high forever and CITIC Pacific Mining CEO Chen Zeng warns time is running out.

In 2018, Zeng told a WA business and political leaders forum that the refusal by Mineralogy to submit an expansion proposal could eventually spell the end for the Pilbara operation.

“The aggregate payments we’ve already made to Mr Palmer and Mineralogy – including the initial acquisition of mining rights and ongoing royalty payments – currently stands at over $1bn Australian dollars at today’s exchange rate,” Zeng said.

“It’s our firm view that Mineralogy’s ongoing failure and refusal to submit the proposals and take the other steps requested of it has caused, is causing and will continue to cause loss and damage to CITIC subsidiaries.”

“Initially this has led to significant increased costs in planning, developing and operating the project.

“The ultimate effect will be a substantial reduction in the scope of operations of the project.

“It may result in the suspension of those operations,” Zeng says.

CITIC Limited is listed on the Hong Kong stock exchange, and more than 40% is owned by Japanese and Thai conglomerates Itochu and CP Group, large institutions and investors.

While CITIC awaits its day in Supreme Court over the expansion application, Palmer is like a landlord holding all the keys.

McGowan’s spokesman says the state government is “actively examining its options to ensure WA jobs are protected”.

Those “options” revolve around a complex 110-page legal agreement signed between the State government and five Palmer companies, including Mineralogy, in December 2008 that define how the Sino Iron Project should run.

Chapple says in the early days they were used to help promote foreign investment in the mining sector and generate local employment opportunities.

The problem for McGowan is that in order to make even a minor amendment to the agreement, both Palmer, a handful of other signatories and the government need to agree to the change.

“It’s an absolute legal nightmare,” Chapple says.

“If one party does not agree to a change, the only option is for the state to introduce and pass the amended State Agreement through both houses.

“Such a legislative move would undoubtedly lead to legal challenge in the High Court.”