Rinehart’s Fortune Falls $2.7 Billion as Profit Declines

The net worth of Australia’s richest individual, Gina Rinehart, has declined by $2.7 billion to $15.2 billion after revenue and earnings slipped at her closely held iron-ore mining company Hancock Prospecting Pty Ltd.

Rinehart’s wealth was calculated using the Bloomberg Billionaires Index. More than half of the fortune stems from her ownership of Hancock, the holding vehicle for most of Rinehart’s mining interests, including royalty rights she inherited from her late father, Lang Hancock, which guarantee her less than

1.25 percent of all annual revenue generated by some of Hamersley Iron ore mines now owned by Rio Tinto Group.

Hancock also holds her 50 percent interest in the Hope Downs mine, which she owns in a joint venture with Rio Tinto, and three thermal coal projects in Queensland. The company is valued using the average enterprise value-to-Ebitda multiple of four comparable publicly traded companies: Fortescue Metals Group Ltd., Vale SA, Rio Tinto and BHP Billiton Ltd.

“Factors outside of the control of Hancock Prospecting, particularly a significant softening in world iron ore prices, have affected the latest results. As a result, sales have been lower,’’ Hancock Chief Financial Officer Jay Newby said in an email to Bloomberg News. “Despite this, Hancock is pushing ahead with development of the major, tier one, $10 billion Roy Hill project, which will ultimately produce 55 million tonnes each year of ore for direct shipping.”

West Perth-based Hancock submitted results for the year ended June 30 with the Australian Securities & Investments Commission. The filing was received by the regulator on Nov. 1 and released to Bloomberg News on Dec. 12.

Earnings Results

Revenue slipped 14 percent to A$1.986 billion ($1.778 billion) compared to a year ago, according to the filing. Net income slid 85 percent to A$489.7 million. Earnings before interest, taxes, depreciation and amortization slid to A$1.1 billion, compared to A$1.5 billion a year ago. Book value rose to A$6.751 billion from A$5.934 billion a year ago.

Rinehart is listed at No. 60 in the Bloomberg wealth rankings, down from No. 41 on Dec. 12. The next richest Australian is Crown Resorts Ltd. gaming mogul James Packer at $6.1 billion, followed by Ivan Glasenberg, the chief executive officer of Glencore Xstrata Plc, who is worth $5.7 billion. Rounding out the top six billionaires in Australia are Frank Lowy, Harry Triguboff and Andrew Forrest.

Two of Rinehart’s children -- John Hancock and Bianca Rinehart -- have sued to replace their mother as trustee of a family trust. At an October hearing, Gina Rinehart agreed to step aside from managing the trust, which holds 23.45 percent of Hancock Prospecting shares. The trial is scheduled to resume in February.

(Updates with comments from Hancock’s CFO in 4th paragraph.)
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