Gina Rinehart has been hailed the clear winner of a complex court case about mining tenements that pitted Hancock Prospecting against the wealthy heirs of mining pioneer Peter Wright and one-time Lang Hancock associate Don Rhodes.
A 1655-page WA Supreme Court judgment, handed down in Perth on Wednesday, found Wright Prospecting and DFD Rhodes won some of their claims for spoils from the massive Rio Tinto-operated Hope Downs mining complex, in Western Australia‘s ore-rich Pilbara region.
Justice Jennifer Smith found Hancock Prospecting – the resources giant for which Mrs Rinehart is executive chair – would be required to pay royalties, damages, interest and costs, which could be worth hundreds of millions of dollars.
But Justice Smith dismissed Wright Prospecting’s claim for a half share of some of Hancock’s iron ore deposits, worth billions of dollars.
And prominent mining industry commentator and analyst Tim Treadgold told the ABC’s Country Hour that the ruling was, overall, a victory for Mrs Rinehart.
‘Clear win for Gina. The key to all this is ownership of the asset. The cash, which has flowed in and out over a 20-year period, is neither here nor there.
‘She owns it, or she shares it with Rio Tinto, and that goes forward.’
Mr Treadgold said Hancock could ‘definitely’ afford the consequences of the court’s ruling.
Gina Rinehart has been hailed the clear winner of a complex court case about mining tenements
‘(Hope Downs is) not actually their biggest asset anymore. It used to be the most important asset but the biggest asset now is the Roy Hill mine, and there are other assets in the group which are also extremely valuable.
‘She’s got rare earth assets, she’s got lithium, she’s got oil and gas. So she’s got a very, very big business.
‘This is a minor pain, a nuisance, an embarrassment. Get it out of the way, finish it off, and then we can move forward.’
The royalty ‘really is petty cash’, he said. ‘I would give it 90 per cent Rinehart, 10 per cent Wrights, something like that’.
What case was about
In her judgment, Justice Smith said: ‘At the heart of the issues raised by the parties to the proceedings were a number of formal agreements made decades ago between men who were friends or colleagues.
‘Who, for some years engaged in harmonious and co-operative arrangements to explore, discover and prospect for iron ore in the East Pilbara.’
Wright had demanded a stake in mined and unmined Hope Downs tenements and royalties amid a claim Hancock breached a 1980s partnership agreement.
An undated supplied image of the Hope Downs 1 mine in Western Australia’s Pilbara region
DFD Rhodes also claimed a royalty share of Hope Downs’ production over an alleged deal with Mrs Rinehart’s father Lang Hancock and Mr Wright that handed over tenements in the 1960s.
The bruising encounter also drew in Mrs Rinehart’s children, over a previous claim by John Hancock and Bianca Rinehart stating their grandfather left them a hefty share in the Pilbara mining resources he discovered in the 1950s.
Justice Smith said it wasn’t necessary to consider the children’s defence ‘as they fail at the first hurdle’.
‘I hope we can finally put these events from decades ago behind us, and as a united family, celebrate and continue the contribution we have made to Australia,’ Mr Hancock said in response.
Rio Tinto was also involved in the battle as the joint-venture partner in Hope Downs.
Hancock Prospecting said the mining giant would have to pay some of the royalties following the decision.
The royalty share payable to Wright and DFD Rhodes wasn’t a significant issue, amounting to about $18 million annually, Hancock’s executive director Jay Newby said.
But when multiplied by the number of years Hope Downs had been operating, the figure skyrocketed.
Hancock Prospecting rejected the Wright Prospecting and DFD Rhodes’ claims during the trial, maintaining that it undertook all the work, bore the financial risk involved in the development and is the legitimate owner of the assets.
Wright said the assets belonged to the enduring partnership.
Mining industry commentator Tim Treadgold said the verdict was a clear win for Mrs Rinehart
The result could trigger more costly legal fights, be it appeals against the judgment or to unravel the value of the royalty entitlement. The trial lasted 51 days.
Mrs Rinehart inherited her father’s iron ore discovery in the Pilbara region and forged a mining empire after he died in 1992.
She developed mines from tenements at Hope Downs, signing a deal in 2005 with Rio Tinto, which has a 50 per cent stake in the project.
The Hope Downs mining complex near Newman is one of Australia’s largest and most successful iron ore projects, with multiple open-pit mines.
Mrs Rinehart’s wealth is estimated to be about $40 billion.
The case will return to court to hear submissions on costs and orders later in the month.
