Rio Tinto to fight $200m payout order
Confirmation that Rio will appeal against the New South Wales Supreme Court ruling came amid an upbeat set of June quarter results that prompted strong buying of Rio shares late on Tuesday.
NSW Supreme Court Justice David Hammerschlag told Rio in May that it should have been paying royalties to companies controlled by Mrs Rinehart and fellow mining heiress Angela Bennett based on a 43-year-old agreement involving the fathers of the two women.
Hancock launched the action against Rio despite the two companies holding a long-standing iron ore joint venture in the Pilbara that delivers most of Hancock's revenue.
After considering its legal options for several months, Rio said on Tuesday that "a notice of intention to appeal has been filed in respect of the court's decision".
Rio has set aside $US183 million to cover any possible liability.
The dispute is separate to another long-running legal battle between Hancock and Ms Bennett's company Wright Prospecting, which is debating the ownership of lucrative iron ore tenements in the Pilbara.
Hancock Prospecting is the biggest shareholder in Fairfax Media, owner of this publication.
Meanwhile, the 51.8 million tonnes of iron ore that Rio produced in the June quarter was narrowly better than most analysts expected, particularly given recent interruptions from rain and equipment failures.
It enabled Rio to maintain its full-year guidance of 265 million tonnes of iron ore in 2013, including volumes owned by joint venture partners.
There was good news from Rio's copper division, which reported that the recent wall collapse at the Kennecott Mine in the US would not dent copper production as much as first thought. The amount of copper mined will now be 100,000 tonnes less than original guidance, rather than 125,000 tonnes as feared.
Arguably the biggest dilemma facing Rio in 2013 is whether to spend $US5 billion expanding its iron ore mines to take production up to 360 million tonnes a year.
The project has come under intense scrutiny from investors who question whether Rio should be spending such large amounts of money during an austerity drive.
On Tuesday, Rio said the expansion to 360 million tonnes was "currently under way", but there was no new commitment to spending and its rhetoric around the expansion was slightly different to before.
Rio shares had spent much of Tuesday below Monday's closing price, but finished the day 75¢ higher at $55.52.
Rio's old rival BHP Billiton will reveal its June quarter results on Wednesday morning, while fellow Pilbara iron ore miner Fortescue Metals Group will report next week.
Frequently Asked Questions about this Article…
Rio Tinto has filed a notice of intention to appeal a New South Wales Supreme Court ruling that it should have been paying royalties to companies controlled by Gina Rinehart and Angela Bennett under a 43‑year‑old agreement. The court ordered payments close to $200 million, and Rio is challenging that decision.
Rio Tinto has set aside US$183 million to cover any potential liability related to the court order tied to the Hancock Prospecting royalties dispute.
Hancock Prospecting launched the royalties action despite having a long‑standing iron ore joint venture with Rio Tinto in the Pilbara that provides most of Hancock’s revenue. The lawsuit concerns historical royalty obligations and is separate from the operational joint venture arrangements.
No. The royalties dispute with Rio Tinto is separate from the long‑running legal battle between Hancock Prospecting and Wright Prospecting over ownership of lucrative Pilbara iron ore tenements.
Rio produced 51.8 million tonnes of iron ore in the June quarter, slightly ahead of analyst expectations despite rain and equipment interruptions. That result allowed Rio to maintain its full‑year iron ore guidance of 265 million tonnes for 2013, including volumes owned by joint venture partners.
Rio reported the recent wall collapse at the Kennecott Mine in the US will have a smaller impact than initially feared. Copper mined is now expected to be 100,000 tonnes less than original guidance, rather than the 125,000 tonnes previously feared.
Rio is weighing a roughly US$5 billion expansion to lift iron ore production to 360 million tonnes a year. The project is reportedly under way but without a new firm spending commitment, and many investors have questioned whether Rio should be spending such large sums during an austerity push.
Rio Tinto shares closed 75 cents higher at $55.52 after the upbeat June quarter results. Competitors reporting shortly include BHP Billiton, which will release its June quarter results the next morning, while Fortescue Metals Group is due to report the following week.
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