Hancock Land Accord Died With Company Founder, Ex-Partner Says
An agreement Gina Rinehart claims gives her a stake in a 3 billion ton iron ore property in Australia died with her father Lang Hancock in 1992, and the stake is rightfully owned by the family of Hancock’s former partner Peter Wright, a lawyer for Wright’s company said.
Rinehart, Asia’s richest woman, is attempting to reclaim a stake in the Rhodes Ridge property by appealing a judge’s decision to award the 25 percent interest to Wright Prospecting Pty. She claims a 1989 agreement to divide properties between Lang Hancock and Peter Wright, including Rhodes Ridge as a joint venture between the two, supersedes a 1984 accord that gave Wright the option to claim Hancock’s stake in a swap of properties.
The property in dispute holds one of the richest undeveloped iron ore properties in the world, with Rio Tinto Group (RIO) holding the remaining 50 percent stake. Rio Tinto already operates mines in the region and has the infrastructure, including a railway to ship the ore to port, in place.
“Hancock agreed the arrangement would cease in the event of his death,” Rod Smith, a lawyer representing Wright Prospecting, or WPPL, said yesterday at an appeal hearing in Perth. “If no property was sold, the rights that existed under the 1984 agreement have effect.”
Earlier in the appeal hearing, Smith gave the first indication of what the property may be worth. He told the three- judge appeal panel that Hancock rejected a A$65 million ($65 million) offer from Rio Tinto’s CRA Ltd. unit for the land in the early 1990s, after having agreed to sell the Marandoo property in the same area to CRA for A$60 million.
Rhodes Ridge Valuation
Valuation of Rhodes Ridge was discussed in closed court during the original trial because it was deemed commercially sensitive, according to a 2010 ruling by Justice Michael Murray.
“Whatever the parties to this litigation understand it’s money,” Smith said on the second day of the appeal hearing. “Why would WPPL give up A$65 million?”
CRA won approval to build a A$500 million mine at the Marandoo site in the Pilbara region of Western Australia in 1992.
Rio Tinto, which produces 15 million tons of iron from Marandoo annually, said in February 2011 it planned to spend $933 million to expand the mine, extending its life by 16 years to 2030. The property has 225 million tons of proved and probable reserves, containing about 63 percent iron, according to Rio Tinto’s 2011 annual report. The Rhodes Ridge property has similar grades, according to the London-based company.
Rio Tinto has been mining at Marandoo since 1994.
Rinehart’s appeal continues an 11-year dispute over the property between the heirs of Hancock and Wright Prospecting founder Peter Wright, whose iron-ore discoveries in the Australian state in the 1950s and 1960s made Rinehart the richest person in the country and Wright’s children, Angela Bennett and Michael Wright, the 14th wealthiest, according to BRW’s Rich 200 list. Michael Wright died in April.
Iron ore has more than doubled to $134.70 a ton as of June 14 from $59.10 on March 27, 2009, helping Rinehart rise to the 29th spot on a list of the world’s wealthiest people with a net worth of $18.6 billion, according to the Bloomberg Billionaires Index.
The Rhodes Ridge property lies between the operating Hope Downs 1 mine and the Hope Downs 4, where Rio Tinto plans to start mining by the end of the year. The Hope Downs mines are equally owned by Hancock Prospecting and Rio Tinto.
Lang Hancock and Peter Wright initially agreed in 1983, an accord that was completed the following year, to divide up some of their properties, with each having the option of taking full control of their portion. Wright opted for a list that included Rhodes Ridge.
Murray had ruled Wright Prospecting is entitled to exercise its option to assume Hancock’s stake.
The appeal case is: Hancock Prospecting Pty. v. Wright Prospecting Pty. CACV43/2011. Supreme Court of Western Australia (Perth).
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