Rinehart may miss iron ore boat

NOT since the 1960s has there been a boom to match recent events in WA’s iron ore industry.

Rio Tinto and BHP Billiton are both spending billions of dollars expanding mines, ports and rail systems.

Small new exporters, such as Mt Gibson and Midwest have joined the rush, and Gina Rinehart is close to starting the development of a mine named after her mother, Hope.

Wait a tick. Did Briefcase just say Gina Rinehart is “close to starting the development of a mine”.

Surely she must be more advanced than to be just at the “close to” stage.

Ahh! You clever reader. You’ve spotted the whole point of this week’s column. If Gina Rinehart is only at the “close to” stage, what on earth has been going on for the past year while every man and his dog jumps aboard the iron ore express.

The answer, sadly, is a mystery. Not that this will stop Briefcase from wandering around the possibilities for the apparent lack of urgency in launching Hope Downs into a red hot market driven by Chinese demand which has pushed iron ore prices up by more than 25 per cent over the past two years.

For Gina the simple act of elevation from the status of potential miner to the real McCoy would not only fulfil a dream of her late father, Lang Hancock, it would rocket her from the ranks of the rich, as measured by the hundreds of millions of dollars, to a person with a personal fortune topping the billion dollar mark – such is the effect of a profitable business when compared with the simple (but very lucrative) royalty stream she now shares with two of the children of the late E.A. (Peter) Wright.

So, if the prize is so attractive what’s afoot?

The answer seems to be another of those fabulous legal puzzles that attach themselves to Iron-Ore Gina like a magnet.

For much of the past decade it was a dispute over her father’s estate, now it appears to be the terms of a joint venture deal – or perhaps an unhappiness with the partner.

Until last year Gina’s partner in Hope Downs was a South African company called Kumba Resources. In fact, Kumba remains the name on the piece of paper but ownership of Kumba has changed. It is no longer a former South African government iron and steel business (that used to trade as Iscor), it is a 67 per cent-owned subsidiary of Anglo American, one of the world’s great mining houses, with a London head office address but with a heart stuck in Johannesburg.

Wire service reporters competed over 2002 and 2003 to win the race to announce that Hope Downs was a go.

What a surprise then in February to be told there was on-going contractual negotiations between the joint venture partners. The resolution, said Hope Downs project director, Russel Tipper, “could be days, it could be weeks”.

Well Russell, it ain’t days because that was a quote from 91 days ago at an iron ore conference in Perth.

It certainly could be weeks, all 13 of them.

 And it might even be viewed as months, three and a bit, actually.

Briefcase is not saying that Gina (and Kumba) have missed the boat, though there was a cry of “all aboard, sailing soon” heard in the background.

It is however, interesting to wonder whether the Rinehart organisation is totally happy with Anglo American as a potential joint venture partner and wondering whether concern has grown after the South Africans behind Kumba unceremoniously dumped a couple of Australian directors off another company in which they have a controlling stake, Ticor.

Anglo American has never found it easy to do business in Australia.

Perhaps it is a culture clash with the formality of London and Jo’berg foundering on the rock of informality in Oz.

Perhaps Anglo just enjoys doing things the hard way.

Or perhaps Anglo just doesn’t understand that Australians never respond well to an organisation steeped in a master/servant culture and that sacking people like Dick Carter and Peter Bradfield at Ticor was bad form; very bad form.

Whatever the reason, there is a delicious (dare Briefcase say it) “irony” unfolding in the iron ore country of the Pilbara.

As Gina and Kumba peruse the fine print in their slow moving contract there is an upstart emerging with a bold plan to start his own mine.

Andrew “call me Twiggy” Forrest is moving at a zillion miles an hour to catch the iron ore express for Shanghai with his Fortescue Metals Group.

He is a long shot – there is the small matter of a billion dollars (plus change) to develop a mine, but finding a pile of money has never been a problem for the old Twiglet.

In fact, let Briefcase think for another tick, wasn’t it Anglo American money that helped build the Murrin Murrin nickel mine. And wasn’t it Anglo American that spat the dummy and walked away when it all got unpleasant, leaving a few hundred million in the red dust of Murrin Murrin.

Oh, how history moves in funny ways. Here’s Gina, keen as mustard to start a mine, suddenly finding she has Anglo on the other side of the board table, and Anglo suddenly finding that that man Forrest might be about to beat them to the punch, again.

“Youth is a blunder, manhood a struggle, old age a regret.” Benjamin Disraeli.