Huge bill for Gina Rinehart after royalties court case
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The news: Australia’s richest person, Gina Rinehart, will have to pay hundreds of millions of dollars to the family of her father’s former business partner after a judge ruled they were entitled to 50% of royalty payments from the Hope Downs iron ore mine.
However, Justice Jennifer Smith of the Supreme Court of Western Australia rejected Wright Prospecting’s claim to 50% ownership of Hope Downs and some tenements in the East Angelas area of the Pilbara.
The judge also said that DFD Rhodes, set up by prospector and engineer Don Rhodes, was entitled to a 1.25% share of royalties from Hanwright reserves, which include Hope Downs — a joint venture between Hancock Prospecting and Rio Tinto.
The context: Pilbara pioneers Lang Hancock and Peter Wright agreed to split the proceeds from any mineral deposits and amended their agreement several times during the 1980s.
The case centred on a 1987 deed, under which Rinehart said Wright Prospecting had “relinquished any right it had to those areas”.
Wright sued in 2010, but the case did not reach court until 2023. It has been estimated that Wright Prospecting’s royalty claim — now headed by Peter Wright’s daughter Angela Bennett — could exceed $1.5 billion, based on half of the 2.5% royalty deal with Rio Tinto.
There will be a further hearing to determine the amounts owed to Wright and DFD Rhodes, including interest.
What they said: Justice Smith said in court: “It perhaps could be open to be found that Wright Prospecting has won half of its case and lost half. And Hancock Prospecting has won and lost half of its case.”
The judge said in her 1655-page judgment: “The parties agreed to share royalties on ore produced from Hope Downs paid by third parties to HPPL [Hancock Prospecting Pty Ltd] and when received by HPPL they were received on behalf of ‘Hancock & Wright’ trading under that firm name … [this] is the only construction that is properly open and gives commercial sense to the 1987 Partnership Agreement, in circumstances where WPPL only relinquished its proprietary interest to the Hope Downs tenements, but not a right to a royalty.”
Wright Prospecting said it was “pleased to finally receive a result in our favour” and that it would review the judgment “in detail before determining if any further steps need to be taken”.
Hancock Prospecting executive director Jay Newby said the primary issue was ownership of the Hope Downs and East Angelas tenements.
“HPPL welcomes the WA Supreme Court decision which decisively confirms HPPL’s rightful ownership of these tenements firmly rejecting the baseless ownership claims of John [Rinehart], Bianca [Rinehart] and Wright Prospecting Pty Ltd in their entirety...
“Over approximately four decades, John, Bianca, WPPL and DFD Rhodes (Rhodes) took no risk and made no meaningful contribution to developing the Hope Downs and East Angelas iron ore mines and infrastructure.”
The source: Supreme Court judgment
