|Based in||Perth, Australia|
|Targeted||base metals, energy fuels|
She's undoubtedly the richest woman investing in mining, anywhere - and certainly in her native Australia. But the odds are that you've never even heard of her.
Ms Georgina (widely known as Gina) Rinehart's formidable reputation on her home patch owes a lot to her being the daughter of the man who is arguably Australia's most renowned (many would say infamous) "mining pioneer", Lang Hancock [see also Clive Palmer].
Hancock senior "discovered" one of the world's best-endowed iron ore deposits in the Pilbara region of Western Australia and his successor company, privately-owned Hancock Prospecting Pty Ltd (HPPL) (taken over by Rinehart in 1992), is the source of most of her wealth [MJ 17-24 December 2010].
When the Australian government in early 2010 proposed imposing a "super rent" on mining company revenues - and then its revision, the Mining Resource Rent Tax - Gina Rineheart took to her guns. She argued that further taxation would "erode" the country's "competitive position" in world markets, lead to a loss of investment, and thereby cramp the financing of social services [MJ 17-24 December 2010, ibid]. This, despite the fact that the avowed purpose of the tax is to balance the budget in order to provide much-needed further revenue.
In order to boost this pro-mining crusade, in late 2010 Ms Reinhart spent Aus$200 million to buy 10% of the Network Holdings television group and 2% of Fairfax Media Ltd which, inter alia, owns the Australian Financial Review, Sydney Morning Herald and The Age newspapers [MJ 17-24 December 2010, ibid].
In March 2011,Forbes magazine listed Rinehart as the world's joint-100th biggest billionaire, with a fortune estimated at US$9 billion [Forbes 11 March 2011; see also Sydney Morning Herald, 4 February 2011].
According to a June 2011 report by Citigroup bank, which estimates the value of “greenfield” mining projects destined to soon come into production, Rio Tinto’s Simandou iron ore project in Guinea stands at the top of the list.
But, surprisingly, Gina Rinehart also has three projects in this top 10 list, the same number as Rio Tinto.
These are: Roy Hill iron ore in Western Australia, which is scheduled to start production in 2014, building to a rate of 55 million tonnes a year; Alpha Coal in Queensland, also scheduled to start in 2014 at a rate of 30 million tonnes of coal and year; and Kevin’s Corner coal in Queensland, scheduled to start in 2013 also at a rate of 30 million tonnes of coal.
Speculating on the power Ms Rinehart may soon exercise over the mining industry, Clare O’Connor of Forbes magazine has valued Hancock Prospecting at US30 billion. If the three mines, mentioned above, come into operation, Ms O’Connor concludes that Ms Rinehart’s privately-held mining interests could be worth US$100 billion – making her not only the world’s richest woman but the richest person on the planet [Forbes, 22 June 2011].
Indeed, just three months later, in September 2011, the Indian infrastructure giant, GVK, agreed to pay Hancock Prospecting Ltd US$1.26 billion, to acquire a 79% interest in the Alpha coal projects, full ownership of the Kevin's Corner project, and the entire rail connecting these projects to the Abbot Point port in Queensland [MJ 23 September 2011].
On 13 April 2012, Tim Treadgold for the Mining Journal (MJ) published a feature article on Ms Rinehart which led with the startling statement that, while "[g]reat fortunes have been made in mining", these are "all are being eclipsed by the rise of Gina Rinehart...who has embarked on a course that will change the future of mining, and possibly the future of Australia" [Mining Journal, 13 April 2012: https://www.mining-journal.com/miners-right/the-miners-daughter].
In late March 2012, Rinehart signed a deal with three Asian steel mills that brought them in as partners on the Roy Hill iron-ore project. Then, two Korean companies, POSCO and STX, teamed up with Japan’s Marubeni, to pay US$3.6 billion for a 25% stake in Roy Hill that, says the Mining Journal, "will cost an estimated US$10 billion to develop and include integrated rail and port facilities".
Despite this expense, according to Treadgold: "Mrs Rinehart’s profit share in the early years of Roy Hill will be around US$866 million annually, and...it all flows into her bank account. As the mine grows to its targeted 55Mt, Mrs Rinehart’s entitlement grows to 41.25Mt which, if iron-ore prices stay around current levels, swells to an annual profit of US$2.88 billion – personally".
As of today, "Mrs Rinehart enjoys annualised, personal income of around US$2.05 billion. Roy Hill, at full production, will lift her annual income to around US$4.93 billion. If she was a company listed on the stock exchange earning a profit that fat, she would easily be valued at more than US$20 billion.
"Interestingly for followers of wealth (and mining) there is more to come for Mrs Rinehart. Her future fortune could grow substantially when she starts more mines with projects such as Rhodes Ridge, East Angelas, Mulga Downs, Wittenoom and perhaps others given that she has a tenement footprint in the iron-rich Pilbara that is roughly the same size as that held by Rio Tinto.
"There is, however, one big difference in valuing Rinehart’s iron ore – it is all hers, and not shared in the same way, as Rio Tinto’s assets are co-owned by 211,506 investors, the latest tally of account holders on the company’s share register.
"Numbers, however, tell only part of the Rinehart story...[Her] ambitions go far beyond mere money. She is determined to change the way Australia functions, economically and politically".
Concludes Tim Treadgold:
"It is Rinehart’s cash flows that ought to have everyone in mining watching carefully to see what she does because it is possible to argue that her extreme wealth, and that of a handful of other Australian mining entrepreneurs, such as Clive Palmer and Andrew Forrest, has already had a profound effect on Australian politics, including the controversial super-tax on iron-ore and coal profits.
"Australia has never seen so much wealth accumulate in one person. It has happened in the US with people such as Bill Gates and Warren Buffett, but they are politically benign. When money has been used to influence politics, such a through the oil baron, John D Rockefeller, government was forced to intervene, breaking up vast fortunes.
Rinehart is accumulating wealth to rival the richest-ever Americans, and she could be on a collision course with both sides of politics – just like her father" [MJ 'ibid'].
Rinehart's starry-studded rise to notoreity received another boost in May 2012, when Taiwan's China Steel Corp announced it had paid Aus$2.5 million to secure a 2.5% indirect interest in her Roy Hill iron-ore project. In April 2012. As noted above, Gina had already agreed to sell 30% of Roy Hill to a consortium consisting of Posco, Marubeni Corp and South Korean shipping and trading company, STX Group [MJ 4 May 2012].
However, Ms Rinehart has not been without problems closer to home - to be precise within her own family. Three of her children have been battling to secure a stake in her minerals' empire, through their participation in a family trust.
Only Ginia Rinehart had sided with her mother in this dipute, while her siblings, John, Hope and Bianca, took their mother to court.
On 9 May 2012, it appeared that the "dissident" offspring had won their case: Gina divided up the family trust giving her children (including Ginia) access to their share of a stake of almost 25 per cent in Rinehart’s Hancock Prospecting, and dividends from the company.
However, as noted by SmartCompany, "dividends will only flow to the children through the trust if Hancock Prospecting – of which Gina still controls 75 per cent – actually decides to pay them.
"Not surprisingly, John, Hope and Bianca are pushing on with their attempt to have Gina removed as trustee" [SmartCompany, 10 May 2012].
As John Hancock said: "Nothing has changed. She (Gina Rinehart) still remains as trustee and we still want her removed. This does not affect our court action" [West Australian, 9 May 2012].
Commented the West Australian:
"The longer this fight goes on, the more complex it becomes. And the more you wonder how a mother and her children can do this to each other" [West Australian, ibid].
(Perhaps money is a lot thicker than blood?)
In June 2012, Ms Rinehart's second largest project - and also Australia's most costly proposed new coal mine - hit a roadblock, when the federal government halted the approval process for Hancock Coal's US$10 billion Alpha mine (in which Indian firm GVK holds 79% and Rinehrt 21%).
Although the Queensland state government had approved the integrated mine, rail and port "development" at the end of May 2012, UNESCO had asked the Australian government to block the port and related infrastructure, claiming these would affect the Great Barrier Reef and pose serious concerns about the site's long term conservation [Economic Times, India, 5 June 2012].
In late October 2012,Rinehart's Hancock Prospecting lost an appeal to retain its share in the proposed, multi-billion dollar Rhodes Ridge iron ore project in Australia’s Pilbara region. Rinehart had appealed against a 2010 Supreme Court decision that awarded Hancock's stake to rival dynasty Wright Prospecting because of an agreement signed by the companies' founders, Lang Hancock and Peter Wright.
The parties signed the deal in 1984 to divide their assets in an effort to prevent any disagreements between the families. However, this decision "leaves Wright Prospecting with 50% of the Rhodes iron ore asset and joint venture partner Rio Tinto the other half" [Mining.com 30 October 2012].
At this time, according to Mining.com, Rinehart's wealth (as tied up in Hancock Prospecting) had arrived at $18 billion "and counting".
Her $1.6 billion Hope Downs 4 project will have annual capacity of 15 million metric tons once it’s operating next year, says Rio Tinto, and will be Rinehart’s second operating mine after the $1 billion Hope Downs mine itself [Mining.com ibid].
As the New Year dawned, it was belatedly revealed that Rinehart had almost-doubled her after-tax profits, to Aus$1.2bn at the end of June 2011, as she finally "gave in to pressure...to disclose details of her fortune" [Reuters 3 January 2013].
The report was released by the Australian Securities and Investments Commission (ASIC), which also revealed that Hancock Prospecting had borrowed money from Rio Tinto.
According to Reuters: "The development of Hope Downs...benefited from the demise of the decades-old annual price fixing of iron ore in 2009, which enabled prices to ebb and flow with demand".
As of the end of June 2011, "Hancock Prospecting sat on a cash pile of A$1.68 billion...and more than doubled its dividend to A$12.5 million from A$6.1 million in 2010". Moreover, the documents filed with ASIC "refer to unspecified legal actions that seek royalties from the Hope Downs mine."
The documents "also show that Rio Tinto loaned money to Hancock Prospecting to allow the company to contribute its share of funds to the latest mine, and as of June 30, 2011, Hancock still owed more than $83 million to Rio Tinto.
However, Rinehart had "also reaped $1.26 billion by selling undeveloped coal deposits in Australia's land-locked Galilee Basin to India's GVK Power & Infrastructure Ltd, controlled by Indian billionaire G.V. Krishna Reddy [in which] Hancock retains a minority stake" [Reuters ibid].
In February 2013, the Queensland Coast and Country Association challenged the state government’s proposed approval of the Alpha mine - also majority-owned by GVK, claiming it would damage the environment and contribute to climate warming [Bloomberg, 21 February 2013]. warming.