Rio Tinto hit on Rinehart ore claim
Despite being adversaries in a separate legal battle, Ms Rinehart and Ms Bennett joined forces to argue that Rio should have been paying royalties on two Pilbara iron ore deposits sold by their fathers in 1970.
The deposits were sold to Rio subsidiaries that briefly lost control of them in the 1970s, and Rio had argued that the temporary loss of control meant royalties were not required to be paid.
There was also debate over the exact location of mining leases, and whether certain iron ore production fell inside tenement boundaries.
But after a 10-day hearing, NSW Supreme Court Justice David Hammerschlag ruled that Hancock Prospecting and Wright Prospecting should have been paid royalties since the mines came into production.
Hancock Prospecting launched the action against Rio despite the two companies holding a long-standing iron ore joint venture in the Pilbara that delivers the vast majority of Hancock's revenue.
The joint venture recently opened a new mine in the Hope Downs precinct, and earlier this year Ms Rinehart publicly urged Rio to push ahead with further mines in partnership with Hancock Prospecting.
A Rio spokesman indicated the company had not ruled out an appeal. "We're examining the judgment and considering our options," he said.
The court triumph came as Ms Rinehart's Hancock Prospecting released an amended version of its 2012 financial results, with the changes seemingly focused on the number of people employed by the group.
As reported by BusinessDay last week, the initial publication of Hancock's 2012 results suggested that only 70 people were employed within the parent company and its fleet of subsidiaries.
But the amended set of results released today has changed the number of overall employees to 252.
The larger number of employees may explain what appeared to be an unusual disconnect between remuneration and staffing patterns at the company.
Most other significant details remained unchanged from the initial set of 2012 financial reports; the company still reported an overall profit of $3.2 billion for the year, a number that was inflated by a $1.16 billion deferred tax asset from the mining tax.
The initial set of 2012 results suggested that remuneration to key personnel had more than doubled to $22.22 million in a year when employee numbers had fallen by 44 per cent.
But the amended set of results shows that increases in remuneration were largely in line with increases in staff numbers and that employee numbers doubled from 126 in 2011 to 252 in the 2012 financial year.
According to the amended document, there were 20 "principal subsidiaries" in which Hancock had an interest at some stage during the 2012 financial year.
Among them was Roy Hill Holdings, the 70 per cent-owned subsidiary through which Ms Rinehart is seeking to build a new iron ore mine, rail and port in Western Australia.
Hancock's main source of revenue is from the iron ore joint venture with Rio Tinto in the Pilbara.
The company is also a substantial shareholder in Fairfax Media, the owner of this publication.
Frequently Asked Questions about this Article…
A NSW Supreme Court judge ordered Rio Tinto to pay about $200 million to companies controlled by Gina Rinehart and Angela Bennett. The court found Rio should have been paying royalties under a 43‑year‑old agreement and ruled that Hancock Prospecting and Wright Prospecting should have received royalties from the mines since they came into production.
The dispute centred on two issues in the 1970s sale of Pilbara iron ore deposits: Rio Tinto argued its subsidiaries briefly lost control of the deposits (so royalties weren't payable), and there was debate about whether iron ore production fell inside the contested mining lease or tenement boundaries. The court disagreed with Rio's arguments.
While Hancock Prospecting launched the royalty action, the companies still operate a long‑standing Pilbara iron ore joint venture that provides the majority of Hancock's revenue. The JV recently opened a new mine in the Hope Downs precinct, and the ruling doesn’t automatically end collaboration — Rio has said it is reviewing the judgment and has not ruled out an appeal.
Yes. A Rio Tinto spokesman said the company is examining the judgment and considering its options, which indicates an appeal has not been ruled out.
Hancock released an amended 2012 report that mainly revised its employee numbers upward from an initial 70 to 252. Other major figures stayed the same: the company reported an overall profit of $3.2 billion, a number boosted by a $1.16 billion deferred tax asset related to the mining tax. The amendment also showed employee numbers doubled from 126 in 2011 to 252 in 2012, which helps explain earlier questions about remuneration levels.
According to the company, the iron ore joint venture with Rio Tinto in the Pilbara is Hancock Prospecting’s main source of revenue. For everyday investors, that means legal outcomes, production changes or JV developments in the Pilbara can materially affect Hancock’s financial position and outlook.
Roy Hill Holdings is a subsidiary in which Hancock holds a 70% stake. It’s the vehicle through which Gina Rinehart is seeking to build a new iron ore mine, rail and port in Western Australia. Its progress and success are important to Hancock’s growth plans and therefore relevant to investors tracking Hancock’s assets.
Yes. The amended 2012 filings list about 20 'principal subsidiaries' in which Hancock had an interest during the year. The company is also a substantial shareholder in Fairfax Media, which may be of interest to investors watching Hancock’s broader portfolio and influence.
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