Gina Rinehart, Asia’s richest woman, is being sued for half her stake in some Western Australian assets, which include a mine being developed with Rio Tinto Group, by the family of her father’s former partner.
Wright Prospecting Pty, founded by Peter Wright, who with Rinehart’s father Lang Hancock discovered the iron ore deposits, is seeking 50 percent of Hancock Prospecting Pty’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.
“Wright Prospecting is now trying to recover its interest in those tenements,” Wright said yesterday in an e-mailed response to questions from Bloomberg News. The company said Hancock has been making commercial decisions regarding the properties without the involvement of Wright. 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.
Hancock Prospecting and Rio, the world’s second-largest exporter of iron ore, jointly own the Hope Downs assets after a 2005 agreement. The $1.6 billion Hope Downs 4 project, owned 50 percent by Rio, will have annual capacity of 15 million metric tons once it’s operating next year, according to an August statement from Rio. 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.
A hearing before Supreme Court Justice Rene Le Miere in Perth was also scheduled today, according to the court calendar. The hearing relates to a royalty matter over Hope Downs 1, according to Wright Prospecting.
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 the price for iron ore has slumped 25 percent as the economy slows in China, the world’s biggest importer. Hancock said in June it planned to complete debt funding of as much as A$7 billion ($7.3 billion) for its Roy Hill mine by early 2013 and is looking to start shipping in 2014.
Rio, based in London, is expanding its iron-ore mines in the Pilbara region to 353 million tons a year by the first half of 2015 from current capacity of 230 million tons, it said in August
Mark Bickerton, a spokesman at Hancock Prospecting, didn’t respond to an e-mailed request for comment or a message left on his voice mail at his Perth office.
Wright accused Hancock of breach of trust for selling the Hope Downs property without its consent and breaches of fiduciary obligations, according to the writ.
Wright sought an accounting of all profits earned by Hancock from the Hope Downs 4, 5 and 6 assets and compensation for the breaches. It also sought a declaration from the court that Hancock held half the property in trust for Wright as well as any proceeds from the sale and royalties Hancock received.
The dispute over Hope Downs between the heirs of Hancock and Wright continues an ongoing battle over assets. The two families have an 11-year dispute over the Rhodes Ridge property, 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, whose lifelong friendship and business relationship appeared to be deteriorating by the early 1980s according to court records, initially agreed in 1983 to carve up some of their properties, with each having the option of taking full control of their portion.
The Hope Downs assets weren’t included in that division of properties.
Further negotiations on the other properties broke down with Hancock accusing Wright of reneging on their agreement on Dec. 30, 1984, over development of the Marandoo iron ore project in Western Australia, Supreme Court Justice Michael Murray, wrote in March 2010, in his ruling awarding the disputed Rhodes Ridge stake to Wright.
“As long as you insist on tying a string that prevents things going, my choice is between spending money on a hopeless cause or continuing to carry an ever-increasing burden,” Hancock wrote to Wright, with the judge citing the letter in the reasons for his decision. “This, I am not prepared to do any longer; so as far as I am concerned it means the end of doing anything together.”
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).