Wright Prospecting Pty’s lawsuit staking a claim in Australian iron ore assets is “curious” as Gina Rinehart, Asia’s richest woman, announced a mining partnership for the properties with Rio Tinto Group (RIO) seven years ago, an executive at her company said.
Wright Prospecting “waited until now, when construction of the Hope 4 mine is nearing completion, and has provided none of the significant funding required for such, to lodge such an unusual bid for unearned late participation,” Hancock Prospecting Pty Chief Financial Officer Jay Newby said in an e- mailed statement yesterday.
Wright Prospecting is seeking 50 percent of Hancock’s stake in three tenements, known as Hope Downs 4, 5 and 6, according to a copy of the writ filed Sept. 24 in Perth in the Supreme Court of Western Australia. The company was founded by Peter Wright, who discovered the iron ore deposits with Rinehart’s father, Lang Hancock. Rinehart inherited the mining assets and is chairman of the company Hancock founded.
Hancock Prospecting and Rio Tinto, the world’s second- largest exporter of iron ore, jointly own the Hope Downs assets under a 2005 agreement. The $1.6 billion Hope Downs 4 project, half owned by Rio Tinto, will have an annual capacity of 15 million metric tons once it’s operating next year, according to an August statement from the London-based miner. It’ll be Rinehart’s second operating mine, after the $1 billion Hope Downs 1 operation.
Australia is the world’s biggest exporter of iron ore.
Rinehart announced the joint venture with Rio Tinto at a 2005 iron ore conference in Perth. Michael Wright, then a principal at Wright Prospecting, and other executives of the Wright company attended that meeting and the announcement was widely covered, Newby said, attaching related news reports.
Wright Prospecting was “aware of the transaction that year, some seven years ago, and chose not to dispute ownership of the tenements,” Newby said.
Wright Prospecting declined to comment on Newby’s statement.
Peter Wright’s heirs, Angela Bennett and Michael Wright, were ranked the 14th richest Australians last year on BRW’s Rich 200 list. Michael Wright died in April.
Wright Prospecting also sued in 2010, claiming royalties from Hope Downs 1 weren’t paid into the partnership. Supreme Court Justice Rene Le Miere consolidated the two lawsuits and set a conference for November, when a trial may be scheduled.
Rinehart is the 35th richest person in the world, with a net worth of $18.8 billion, according to the Bloomberg Billionaires Index. Her wealth has declined this year by 6.8 percent, or $1.4 billion, as iron ore prices slumped 25 percent with the economy slowing in China, the biggest importer.
Rio Tinto said in August it’s expanding iron-ore mines in the Pilbara region to 353 million tons a year by the first half of 2015 from the current capacity of 230 million tons.
Wright Prospecting, in its lawsuit over Hope Downs 4, 5 and 6, accused Hancock of breach of trust for selling the property without its consent and breaches of fiduciary obligations, according to the writ.
Wright sought an accounting of all profits earned by Hancock from those assets and compensation for the breaches. It also asked the court to declare Hancock held half the property in trust for Wright, and to award it any proceeds from the sale and royalties Hancock received.
The two families have been in an 11-year dispute over a property called Rhodes Ridge, with a judge having awarded Rinehart’s 25 percent stake in it to Wright. Rinehart appealed and a decision is pending.
The Hancock and Wright partnership owned the Hope Downs 4, 5 and 6 tenements in the 1970s, Wright said in the statement. The tenements were re-awarded in 1989 by the Western Australian government and held by Hancock on the partnership’s behalf, according to Wright.
Lang Hancock and Peter Wright’s lifelong friendship and business relationship appeared to be deteriorating by the early 1980s, according to court records. They initially agreed in 1983 to carve up some of their properties, with each having the option of taking full control of their portion, records show. The Hope Downs assets weren’t included in that division.
Rinehart was also sued last year by three of her four children, who are seeking to have her removed as trustee of a multibillion dollar trust.
The Hope Margaret Hancock Trust was created by Lang Hancock for the benefit of his grandchildren. The trust holds 23.45 percent of the voting shares of Hancock Prospecting and receives dividends from the company.
Rinehart had warned her children that taking control of the shares would push them into bankruptcy because they would have to pay hundreds of millions of dollars in taxes, according to court documents. According to Hancock Prospecting’s constitution, the shares can’t be sold to anyone outside the family or used as collateral for loans.
The case is between Wright Prospecting Pty and Hancock Prospecting Pty. Civ2617/2012. Supreme Court of Western Australia (Perth).
To contact the editor responsible for this story: Douglas Wong at firstname.lastname@example.org