Gina Rinehart’s Hancock Takes A$641 Mln Coal Asset Writedown

Gina Rinehart’s private company booked a A$641 million ($548 million) writedown on a coal project in Australia after a partner failed to make payments.

The impairment charge on its interests in the coal assets are due “primarily to the lack of anticipated payments” from GVK Group, closely held Hancock Prospecting Pty said today in an e-mailed statement.

Rinehart, Asia’s richest woman, pays more tax in Australia than any other individual, according to the statement.

Indian billionaire G.V. Krishna Reddy’s GVK agreed in 2011 to pay $1.26 billion for Hancock’s 79 percent stake in the Alpha and Alpha West projects, all of the Kevin’s Corner project and associated rail and port projects in Queensland state’s Galilee Basin.

Hancock gave GVK an open-ended extension on a $560 million payment due for the project, the Australian Financial Review reported in September without saying where it got the information.

The GVK Hancock venture received environmental approval for the Alpha coal project last month and GVK said financing agreements would be completed after sales accords were executed and other issues addressed.

GVK is in talks with Hancock for restructuring terms of payment to its Australian partner, the Secunderabad, India-based company said in an emailed statement. It expects a solution to the talks in a few months, according to the statement.

Iron Ore

Power station coal has slumped to a five-year low on supply increases, eroding the prospects for planned new mine projects. BHP Billiton Ltd., Rio Tinto Group and Anglo American Plc have abandoned proposals for an expansion of a coal port at Abbot Point in Queensland state.

Underlying net profit from operations rose 78 percent to $1.1 billion in the 12 months to June 30 from A$601 million a year earlier on increased iron ore output, Perth-based Hancock said in the statement.

Hancock, which forecasts shipments will begin from its $10 billion Roy Hill iron ore mine in Western Australia in September, said profits this fiscal year will probably fall on tumbling prices of the steelmaking ingredient.

Iron ore has sunk to a five-year low as the largest producers expand output and as Chinese steel mills curb output to cut pollution.

Hancock’s Roy Hill will add about 55 million metric tons of new supply a year, adding to a global surplus and putting additional pressure on prices, Moody’s Investors Service said in an Oct. 17 report.

Before it's here, it's on the Bloomberg Terminal.