Business
Mining giant Rio Tinto, Hancock Prospecting to pay huge royalties
Setback for Australia’s richest person Gina Rinehart in case involving her father’s partner
Hancock Prospecting has been embroiled in litigation over the Hope Downs mine complex in the state's iron-ore-rich Pilbara region with the family of her father's former business partner, Peter Wright, for 15 years. (Image for illustrative purposes only)
Melbourne: Hancock Prospecting, owned by Australia's richest person Gina Rinehart, and Rio Tinto must pay what could amount to hundreds of millions of dollars in royalties from iron ore mines to her father's former business partners, a court ruled on Wednesday.
Hancock Prospecting has been embroiled in litigation over the Hope Downs mine complex in the state's iron-ore-rich Pilbara region with the family of her father's former business partner, Peter Wright, for 15 years. Top iron ore miner Rio Tinto is a joint-venture operator and is jointly liable for the payments, the court ruled.
Rinehart's father, Lang Hancock, and his former classmate Peter Wright joined up in the 1950s to win the mineral rights for the area that eventually became the Hope Downs mine. The two agreed to a deal in 1969 with businessman Don Rhodes that promised a small royalty percentage from ore produced in the area.
The lawsuit mainly centred on the partnership between Wright and Hancock, including the division of assets, in an agreement negotiated by them in the 1970s and later amended before Wright's death in 1985, local media reported. Rhodes' descendants also made a claim based on the 1969 agreement, the ruling said.
In her ruling, Justice Jennifer Smith of Western Australia's Supreme Court said Wright Prospecting and DFD Rhodes, the companies representing the descendants of Wright and Rhodes, should be paid a share of past and future royalties on some of the mines at Hope Downs.
The actual amounts of the royalties will be determined at a separate trial at a later date.
"After many delays, we are pleased to finally receive a result in our favour. The decision is lengthy and complex. We will review it in detail before determining if any further steps need to be taken," a spokesperson for Wright Prospecting said.
DFD Rhodes did not immediately respond to a request for comment. A Rio Tinto spokesperson said the company acknowledged the decision of the court and would fully consider the judgment in detail.
"Bringing Hope Downs to life required significant investment in exploration, evaluation and development, obtaining thousands of government approvals, securing major project financing and a joint venture partner," Hancock Prospecting's Executive Director Jay Newby said in a statement.
Royalty claims would amount to A$4 million ($2.86 million) per year for Rhodes and about A$14 million per year for Wright Prospecting, he said.