Rinehart spends to spread influence

THE private wealth of iron ore magnate Gina Rinehart has become a little more public in the past year, during which she emerged as Australia’s richest person.

Mrs Rinehart’s wealth has been estimated at more than $10 billion, based on the value of her iron ore and coal assets. Those values have become clearer as projects developed by her company, Hancock Prospecting, have emerged from concept to reality – assisted to no small degree by surging commodity prices.

There has also been higher profile stakes in listed companies such as Ten Network Holdings, in which she became a big shareholder and director.

Arguably, though, it was her emergence as a vocal critic of the proposed special taxes on mining that has truly turned the spotlight on Mrs Rinehart, who took over the ailing business interests of her father, Lang Hancock, the founder of the Pilbara’s iron ore industry.

Standing on the back of a ute chanting anti-tax slogans was one of the rare times Mrs Rinehart was seen in a public setting, even though she was already placed among the top handful of the nation’s richest people.

Despite industry concerns about the impact of the mining tax on investment in the sector, Mrs Rinehart’s stocks have risen higher than others’ as China’s seemingly insatiable demand for commodities has helped her eclipse other wealth creators in fields such as retail and property. 

Both iron and ore and coal have performed well, providing the fuel to project her fortune to become Australia’s biggest.

Hancock Prospecting has also had its recently launched Galilee Basin coal operations in Queensland on the market, and has struck a $1.26 billion deal with Indian company GVK to buy the coal assets and develop further infrastructure.

While the coal assets are significant, the big value is in iron ore where Hancock Prospecting has, among other things, a 50:50 joint venture with minerals giant Rio Tinto at the Hope Downs project near Newman. The joint venture already has two operating mines, which produce more than 30 million tonnes per annum.

Rio Tinto approved a $US1.6 billion investment (Rio Tinto’s share of that was $US1.2 billion) in the Hope Downs 4 mine in August last year. The cost of the mine is expected to be $2.1 billion with a 15mtpa capacity; first ore is expected in 2013.

Hancock Prospecting also has the Roy Hill project, an estimated $7.2 billion development to create a 55mtpa operation. South Korea’s Posco is a partner, with the rights to earn up to 15 per cent of Roy Hill 1.

Also, there is the Nicholas Downs ferruginous manganese mine in the Pilbara and the Jacaranda Alliance, a joint venture with former Rio Tinto and CRA executives to explore for minerals and petroleum in Australia and overseas.

At Nicholas Downs, Hancock Prospecting has struck a deal with Mineral Resources, whose founders are among those in WA Business News’ list of wealth creators, to develop the project.

More recently, Hancock Prospecting became a significant shareholder in Mineral Resources, converting 10 million options at a cost of $60 million to take its stake to more than 15 million shares worth almost $170 million last week.

A company linked to Hancock has also recently bought a stake in Carabella Resources, worth about $1.7 million.

However it is Ten Network where Mrs Rinehart’s most prominent interest outside her own mining operations has taken place.

Late last year, she spent about $165 million to take a 10 per cent stake in Ten Network, an investment that earned her a board seat – her only directorship of a listed company.

It was not the investment outside mining as it was the decision to choose media that prompted much discussion among market observers. The Hancock family has a history of media involvement, with Mr Hancock and his mineral exploration partner Peter Wright launching a long-running Sunday paper known as the Independent in 1969. 

Like Mrs Rinehart today, Mr Hancock was worried about the direction of the nation and concerned about political decisions that impacted on investment. He was also concerned about the media of the day and its ability or desire to question the political leadership.

Mr Hancock decided to exercise what influence he could on public opinion through his own media investment – a start-up newspaper published in WA.

While Mrs Rinehart is understood to hold similar views, she has chosen a different strategy when it comes to media – opting to put her money in an established broadcaster with national reach.

Just how much influence Mrs Rinehart has through this stake may never be fully known.  It is worth noting that conservative newspaper commentator Andrew Bolt launched his own television show on Channel 10 shortly after Mrs Rinehart joined the board.

Mrs Rinehart has also used her status and fortune to back causes such as Australians for Northern Development & Economic Vision.

ANDEV wants to see policies that favour development in the northern areas of the continent.