The strained partnership between Clive Palmer’s private company and China’s CITIC Pacific at a huge iron ore project in WA could be on the rocks.

Clive Palmer’s Mineralogy has moved to terminate CITIC Pacific’s rights to mine his iron ore in Western Australia, casting doubt over an $8 billion project.

The federal MP’s private company says it has served a termination notice, giving CITIC 21 days notice that it will no longer be able to mine Mineralogy iron ore at its massive Sino Iron project in the Pilbara.

Mineralogy said its actions were the result of governance and market disclosure concerns.

It said the termination notice was issued on September 12 this year, after CITIC allegedly failed to address matters raised in a default notice dating back to July 2012.

Mineralogy director Clive Mensink said the company may lodge a complaint with regulators in Hong Kong, where the Chinese government-owned entity is a listed company.

The federal MP is already embroiled in a legal battle with CITIC, which is seeking compensation over $12 million it claims was inappropriately used by Mineralogy.

CITIC alleges Mr Palmer knowingly assisted in a breach of trust by re-directing money paid for port management services to other purposes, including advertising for the Palmer United Party in last year’s federal election.

Mr Palmer has strenuously denied the allegation, and lawyers for the MP told a Supreme Court hearing in Brisbane this month that the money had been repaid.

The Sino Iron project began production later than planned after a dramatic cost blow out.

AAP is seeking comment from CITIC.