Gina Rinehart has emerged as the definitive victor in a convoluted legal battle over mining rights. This case saw Hancock Prospecting facing off against the affluent descendants of mining trailblazer Peter Wright and former Lang Hancock partner, Don Rhodes.
The Western Australia Supreme Court, in a lengthy 1655-page ruling delivered in Perth on Wednesday, concluded that while Wright Prospecting and DFD Rhodes succeeded in some of their claims to profits from the Rio Tinto-run Hope Downs mining site, located in the ore-abundant Pilbara region, they did not win all their demands.
Justice Jennifer Smith ruled that Hancock Prospecting, led by Executive Chair Mrs. Rinehart, must pay a substantial amount in royalties, damages, interest, and legal fees, potentially totaling hundreds of millions of dollars.
However, the court dismissed Wright Prospecting’s claim to a 50% share of several lucrative iron ore deposits owned by Hancock, a decision involving assets valued in the billions.
Mining industry expert and commentator Tim Treadgold shared with ABC’s Country Hour that the judgment ultimately favored Mrs. Rinehart.
“It’s a clear win for Gina,” Treadgold remarked. “The crux of the matter is asset ownership. The financial exchanges over the past two decades are not the main issue here.”
‘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.
