Australia’s wealthiest individual, Gina Rinehart, faces the prospect of distributing a significant portion of her iron ore fortune after two competing mining families secured victories in a heated legal confrontation against her.
This legal dispute involved Rinehart’s company, Hancock Prospecting, clashing with the descendants of mining trailblazer Peter Wright and engineer Don Rhodes. The conflict centered around allegations of breached contracts dating back several decades.
Today, Justice Jennifer Smith delivered a comprehensive judgment spanning over 1,600 pages in the West Australian Supreme Court in Perth.
Both Wright Prospecting and DFD Rhodes achieved partial success in their claims concerning the substantial Hope Downs mining operation, managed by Rio Tinto, located in Western Australia’s mineral-rich Pilbara region.
Justice Smith determined that Hancock Prospecting is obligated to pay royalties, interest, and legal costs, which could amount to several hundred million dollars.
“Central to the issues between the parties were several formal agreements made many years ago among men who were either friends or colleagues,” noted the judge.
“Who, for some years engaged in harmonious and co-operative arrangements to explore, discover and prospect for iron ore in the East Pilbara.”
However, Justice Smith dismissed Wright Prospecting’s claim for a half share of Hancock’s iron ore deposits.
Wright had demanded a stake in mined and unmined Hope Downs tenements and royalties amid a claim Hancock breached a 1980s partnership agreement.
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 reclusive 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 rejected the children’s claim.
Rio Tinto was also a party 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 per year, company executive director Jay Newby said.
Gina Rinehart inherited Lang Hancock’s iron ore discovery after he died in 1992.Â
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.
The result could trigger more costly legal fights, be it appeals against the judgment or to unravel the value of the royalty entitlement.
The 51-day trial, with more than 4000 documents, featured sensational allegations against Mrs Rinehart – which have been vehemently denied – including that she devised an unlawful scheme to defraud her children.
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 and she is the executive chair of Hancock Prospecting.
NEVER MISS A STORY: Get your breaking news and exclusive stories first by following us across all platforms.
