Iron ore billionaire Gina Rinehart at her Roy Hill mine in Western Australia. Photographer: Philip Gostelow\/Bloomberg <\/p>\n
\u00a9 2014 Bloomberg Finance LP<\/small> <\/figcaption><\/figure>\n
The most significant challenge to the $25 billion fortune of Gina Rinehart, Australia\u2019s richest person, will reach its climax in a Perth courtroom tomorrow.<\/p>\n
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\u2019s extensive business interests a loss will be a personal blow.<\/p>\n
At the heart of a complex dispute is the breakdown of a partnership which Rinehart\u2019s father, the late Lang Hancock, forged with lifetime friend Peter Wright to develop mines in WA.<\/p>\n
The \u2018Hanwright\u2019 Joint Venture<\/strong><\/p>\n Their \u2018Hanwright\u2019 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.<\/p>\n 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.<\/p>\n That led them to London-based Rio Tinto, one of the world\u2019s 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.<\/p>\n 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.<\/p>\n Hamersley Iron train leaving the Paraburdoo mine. Photo by Fairfax Media via Getty Images)<\/p>\n Fairfax Media via Getty Images<\/small> <\/figcaption><\/figure>\n 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.<\/p>\n 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.<\/p>\n 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\u2019s death in 1985 and Hancock\u2019s death in 1992.<\/p>\n Rinehart, as Hancock\u2019s 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.<\/p>\n 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.<\/p>\n But it\u2019s 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.<\/p>\n<\/p><\/div>\n A lot of iron ore has been extracted from the series of mines which comprise the Hope Downs project and Rinehart has reinvested her share of the profits in developing the bigger Roy Hill mine in which she has a 70% stake.<\/p>\n Appeal Likely<\/strong><\/p>\n Since the legal battle between the two families reached the Supreme Court in 2010 it has been heard by three judges with Justice Smith warning that she might not be the last, warning that whatever her finding it is likely to be appealed.<\/p>\n Rinehart\u2019s personal fortune of $25 billion means she is well placed to continue the legal fight, but so can the Wright family which is led today by Peter Wright\u2019s daughter Angela Bennett with her $4.3 billion fortune.<\/p>\n It\u2019s the wealth created by the success of Hancock and Wright more than 50 years which is paying for the legal action, unquestionably to the dismay of both men if they were alive today.<\/p>\n This article was originally published on Forbes.com<\/a><\/em><\/p>\n<\/p><\/div>\n<\/div>\n<\/div>