Forbes hails Rinehart's rejuvenation

Emboldened by a bounceback in her fortune, Gina Rinehart is back at the top of the Forbes rich list while she diversifies into controversial but lucrative shale oil.

Timing is everything: just over a year ago New York magazine Forbes put iron ore tycoon Gina Rinehart on the world stage when it valued the WA tycoon at $18 billion, proclaiming her the "richest woman in the Asia Pacific."

Yesterday Forbes released this year’s ‘rich list’ valuation and Rinehart was back within a whisker of last year’s valuation, coming in at $17 billion... almost triple her nearest Australian rich rival, James Packer, who managed an improved valuation of $6 billion against $4.5 billion in 2012.

Fortunately for Rinehart the annual Forbes list gets printed in February each year. Just six months ago, with iron ore at $86.90 against today’s $148, Rinehart would have slipped off the radar.

No doubt the shocking downward plunge in iron ore prices in the first half of 2012, combined with highly visible and unsuccessful diversification into media through Ten Network and more lately Fairfax, has prompted Rinehart and a newly formed investment team within her Hancock Prospecting empire to reactivate investing in what they know best… resources.

But it is the nature rather than the scale of this week’s surprise move by Rinehart on Lakes Oil that has caught the market’s imagination. Lakes Oil is one of the handful of players in the local shale oil industry (and with it the controversial extraction technology known as ‘fracking’).

In turn shale oil has been the launchpad for a revival in the US oil and gas sector. In fact the shale-driven rebound in US energy is ultimately expected to not just revive the American energy sector but to empower US manufacturing with lower fuel prices.

Rinehart's Lakes Oil investment is small – a $4 million investment in the junior that has development plans for 'unconventional oil and gas' in Victoria's Gippsland Basin.

Rinehart often makes 'plays' in the resources area, however the Lakes Oil deal, which could convert to an 18 per cent stake, gives Rinehart and her team a ringside seat in the small and tightly held world of Australian shale currently dominated by two key players: Santos and Beach Energy.

Moreover, in common with many 'hot' areas of mining investment in the past – uranium mining five years ago for example – the chances are that a raft of smaller companies will run up fast and then blow out, leaving the field clear for a handful of major players to sweep up the winnings. In uranium the welter of speculative stocks that were household names in 2006 have been forgotten, leaving the field clear to independents such as Paladin and majors such as BHP Billiton.

In shale Rinehart has a prospect that has the scale to match even her exceptional ambitions. And it's worth noting that for all the negative attention Rinehart gets for her hard right politics, she rarely puts a foot wrong when it comes to making money out of resources. Over the last year there were no signs of panic as the iron ore price plunged and her steady accumulation of key business partners such as Rio Tinto at Hope Downs and Korea's Posco at Roy Hill reveal an utterly rational strategist behind the more alarmist political views.

Of course it would not be Rinehart without controversy – and just to ensure environmentalists will be comprehensively aghast at the news the richest person in Australia has plunged into the fracking-troubled world of shale, Rinehart has appointed Professor Ian Plimer to the board of Lakes Oil. (The ease with which Rinehart's allies move through mining has to be contrasted with the fate of her allies in media.)

Plimer, a wildly provocative climate sceptic, is the bete noire of environmentalists but a little like Rinehart herself, he is all too easy too dismiss as eccentric. Plimer is a geology professor with wide experience in the mining industry... and together Rinehart, Plimer and the investment team at Hancock Prospecting may have a lot more surprises in store for Australia's fledgling shale sector.