Iron ore billionaire Gina Rinehart at her Roy Hill mine in Western Australia. Photographer: Philip Gostelow/Bloomberg
© 2014 Bloomberg Finance LP
The most significant challenge to the $25 billion fortune of Gina Rinehart, Australia’s richest person, will reach its climax in a Perth courtroom tomorrow.
Justice Jennifer Smith is expected to hand down her decision in a Western Australian Supreme Court case which has been running for 16 years and while unlikely to significantly affect Rinehart’s extensive business interests a loss will be a personal blow.
At the heart of a complex dispute is the breakdown of a partnership which Rinehart’s father, the late Lang Hancock, forged with lifetime friend Peter Wright to develop mines in WA.
The ‘Hanwright’ Joint Venture
Their ‘Hanwright’ agreement covered discoveries made while exploring in the remote Pilbara region of the State in the 1950s, including an asbestos mine and vast tracts of iron ore.
Too big for Hancock and Wright to develop, their discoveries also faced the hurdle of an Australian Government ban on exporting iron ore, a hangover from the second world war.
That led them to London-based Rio Tinto, one of the world’s biggest mining companies, which agreed to examine what they had found and pay a permanent 2.5% cash royalty on the value of all iron ore sold.
Rio Tinto, then trading in the Pilbara as Hamersley Iron, started mining high grade ore on the Hanwright tenements in the 1960s, initially exporting to Japan.
Hamersley Iron train leaving the Paraburdoo mine. Photo by Fairfax Media via Getty Images)
Fairfax Media via Getty Images
In its early years the royalty was not the bonanza it has become mainly providing for a comfortable lifestyle for Hancock and Wright who had attended the same school in Perth, going on to live a few streets apart in the leafy riverside Perth suburb of Dalkeith.
The royalty was certainly not enough for Hancock who was keen to develop his own mines, investing heavily but unsuccessfully in ventures that included an attempt to ship iron ore to Romania, taking payment in railway rolling stock which turned out to be sub-standard.
Tension in the Hanwright partnership led to an attempt to equally divide the assets before the two men died to prevent a legal brawl between future generations but those efforts which started in the early 1980s were overtaken by Wright’s death in 1985 and Hancock’s death in 1992.
Rinehart, as Hancock’s only child inherited an estate in poor condition and despite the unstoppable cash inflow from the Rio Tinto royalty she was forced to undertake a major overhaul of the family business.
Her greatest early success was to do what had eluded her father, develop a Hancock family iron ore mine, the 50/50 joint venture Hope Downs project named after her mother.
But it’s in Hope Downs that the core of the long-running legal dispute lies because the Wright family is not involved despite the original 50/50 joint venture which Rinehart argues has ended. The Wright family disagrees.