19/12/2013 - 14:42

Rinehart stands out in year many found tough

19/12/2013 - 14:42


Upgrade your subscription to use this feature.

FEATURE: Gina Rinehart's ability to maintain momentum at the Roy Hill project put the mining magnate at the top of our people of the year list.

LEADING ROLE: Gina Rinehart's ability to invest in Roy Hill is underpinned by the profitability of her company Hancock Prospecting. Photo: Attila Csaszar

Gina Rinehart's ability to maintain momentum at the Roy Hill project put the mining magnate at the top of our people of the year list.

At the start of 2013, Australia’s richest woman appeared headed for a disappointing year.

Gina Rinehart’s legal dispute with three of her children over control of their family trust was continuing and attracting all the wrong headlines.

There was also speculation the dispute was one more barrier standing in the way of securing financial backing for her ambitious Roy Hill mining project.

Twelve months on, there has been some progress on the family trust dispute, but it remains unresolved.

More significantly, for Mrs Rinehart and the Western Australian economy, the $10 billion Roy Hill project is proceeding

The progress on the project is a show of faith by Mrs Rinehart’s company, Hancock Prospecting, and her joint venture partners POSCO, Marubeni, and China Steel Corporation.

They have collectively tipped hundreds of millions of dollars of equity into the project while negotiations continue over a $7 billion project finance package.

Importantly Roy Hill is the only major mining project to start construction this year and has been a lifeline for dozens of contractors affected by the slowdown in the resources sector.

Mrs Rinehart’s ability to invest in Roy Hill is underpinned by the profitability of Hancock Prospecting, which reported revenue of $2 billion and an operating profit of $601 million in the year to June 2013.

The company has foreshadowed stronger profits in the current financial year, off the back of higher iron ore prices and the ramp up of production and shipments from Hope 4, the third mine in the Hope Downs joint venture.

Hancock Prospecting has used its strong profits to reduce its debt levels, so that it can provide both equity and subordinated debt facilities for the Roy Hill project. 

The completion of the Roy Hill project would realise a long-held dream of Mrs Rinehart and her father, the late Lang Hancock, to develop and control their own iron ore mine.

Roy Hill is an integrated mine, railway and port project with planned annual shipments of 55 million tonnes.

That would make it Australia’s fourth largest iron ore exporter after RioTinto, BHP Billiton and Fortescue Metals Group.

It will also be a technically advanced project with the Pilbara activities controlled from a recently completed remote operations centre at Perth Airport.

The completion of Roy Hill will not be the end of Mrs Rinehart’s growth ambitions.

With its joint venture partner Rio Tinto, Hancock is undertaking studies on further Hope Downs developments.

Hancock also owns major thermal coal deposits in Queensland.

The distribution of profits from Hancock Prospecting’s various operations will depend on the outcome of the legal dispute with her children.

Her only son, John Hancock and eldest daughter Bianca Rinehart are seeking control of the Hope Margaret Hancock Trust, which owns 23.4 per cent of Hancock Prospecting.

Mrs Hancock decided in October that she no longer wanted to be trustee of the trust but her youngest daughter, Ginia Rinehart, is continuing to contest the appointment of a new trustee.

Mrs Rinehart’s third daughter, Hope Welker, withdrew from the case earlier this year.

 - Mark Beyer

Andrew Forrest and Nicola Forrest - a growing fortune puts them on the global stage

During the past 12 months, Fortescue Metals Group chairman Andrew Forrest has been in the headlines more for giving things away than for digging up iron ore-laden red dirt.

In October, Mr Forrest and his wife, Nicola, rebranded their philanthropic efforts under a single entity – the Minderoo Foundation.

The expanded focus includes all of Mr Forrest’s charity organisations, including the indigenous Australian-focused GenerationOne, global slavery advocacy group Walk Free Foundation, and children’s charity Hope For Children.

At the time of the rebranding, Mr Forrest said he and his wife were privileged to be able to help the least fortunate people, both within Australia and globally.

Mr Forrest followed those moves up later that month with a $65 million donation to the University of Western Australia – the largest single pledge in Australian history.

Also in October, Mr Forrest was appointed by the federal government to head up a national review into indigenous training.

He was also active in the arts sector throughout 2013, moving to chair the Foundation of the Art Gallery of Western Australia in June, while at the same time donating $3.5 million. 

- Dan Wilkie

Colin Barnett - a tough year after a resounding win

Surely none of the state’s political leaders would be looking forward to a break over the New Year more than Premier Colin Barnett, who has endured a year of wildly fluctuating fortunes.

Mr Barnett led the government to a resounding victory at the state election in March, with the Liberals securing big swings in a number of Labor strongholds and gaining a majority in their own right. 

Rumours had circulated during the election campaign that the 62-year-old premier looked tired and unwell, with the implication he might not be able to serve out his full term if re-elected.

If anything, Mr Barnett looked energised as he kicked off his second term in office, backed up by a number of fresh faces in cabinet. 

But the good times didn’t last.

The past nine months have been perhaps Mr Barnett’s most challenging period in office – and there are few signs it is going to get easier anytime soon.

Mr Barnett’s difficulties began with Woodside Petroleum’s announcement in April it could not make the financial case to build a gas processing plant at James Price Point, as Mr Barnett had long advocated.

This was followed by the final collapse of another of Mr Barnett’s pet projects in June, with Mitubishi announcing it would no longer go ahead with the $6 billion Oakajee mine, port and rail network.

Mr Barnett also faced difficulties within his own party as he pursued local government amalgamations, with some of his own MPs publicly opposing the plans.

Meanwhile, news of the government’s deteriorating budget circumstances came to light. The state budget, handed down in August, forecast a $147 million deficit in 2014-15 with net debt spiralling to $28 billion over the forward years.

The government then undermined its own rhetoric on the need to make tough decisions to preserve the budget when it backflipped on a number of savings measures, including a plan to halve the residential solar feed-in tariff rate.

The government has been under fire on several fronts. Its list of challenges includes the unpopular Synergy-Verve merger, funding the construction of major projects such as Elizabeth Quay and the new football stadium, and committing to its fiscal action plan to reduce debt and expenditure.

The premier has maintained a tight circle of advisers including Narelle Cant, Brian Pontifex, Dixie Marshall and Peter Conran, with much of his decision making understood to come from within this inner sanctum.

With former heir Christian Porter moving to federal politics, Treasurer Troy Buswell again in the headlines for the wrong reasons, and Nationals leader Brendon Grylls stepping down to the backbench, critics claim the government has been exposed as lacking talent.

However, there are no shortage of ambitious MPs in cabinet who are considered potential successors, including Police Minister Liza Harvey and Environment Minister Albert Jacob.

For now, though, Mr Barnett remains at the centre of political power in WA. His capacity to make tough choices and sell them to the public in the coming months may determine his political legacy.

- Michael Ramsey

Malcolm McCusker and Tonya McCusker - champions of philanthropy

Governor of Western Australia Malcolm McCusker and his wife, Tonya, have long been passionate philanthropists, but 2013 was the year they took their generosity to a new level.

This year the pair attended at least 173 social engagements for philanthropic causes, which has increased their reputation as one of the couples in WA most committed to giving.

At the time of his appointment as governor, in 2011, Mr McCusker outlined out his intention to use the role as an opportunity to champion community causes.

After accepting the role, he announced his intention to donate his salary – amounting to more than $400,000 – to charities and community causes.

In the 2011-12 financial year the McCuskers facilitated donations worth more than $5 million through their McCusker Charitable Foundation, up from $4 million in 2010-11.

Much of the McCuskers’ focus is on medical research, and they have donated more than $1 million to the Telethon each year since 2011, $1.5 million to the Harry Perkins Institute (formerly the WA Institute of Medical Research), and $900,000 to Murdoch University for medical research.

But it’s their decision to make public their generosity that has raised their profile, which the McCuskers consider an education in philanthropy.

 “What we’re trying to do is raise the level of public appreciation of the importance of giving,” Mr McCusker has told media in the past.

- Shanna Crispin

Mathias Cormann and Julie Bishop - at the centre of power in Canberra

In a debut cabinet lineup short on surprises, the appointment of Mathias Cormann as finance minister emerged as the biggest revelation.

As the man tasked with the unenviable job of reining in government spending, Senator Cormann has been entrusted with big responsibilities for someone who has never previously served in government.

However, his admirable performance over the past six years – both in the parliament and behind the scenes as a powerbroker in Western Australia – means few would begrudge his promotion.

Senator Cormann was selected to be the coalition’s official campaign spokesman during the federal election; and with good reason. He has proven to be accomplished at selling the party line, staying relentlessly on-message and across his brief.

While playing a supporting role to Treasurer Joe Hockey when it comes to selling financial reform to the public, Senator Cormann has maintained a regular presence on the Canberra media circuit and established himself as a dependable lieutenant.

The coalition was elected on a promise to slash waste and restore the budget to surplus but has quickly learnt this is an immensely challenging task in government.

With the government’s mid-year economic and fiscal outlook revealing the budget deficit has blown out to $47 billion, Senator Cormann has his work cut out for him. 

Western Australia’s most senior politician in Canberra will meanwhile be among those keen to regroup after a challenging start to being in office.

Curtin MP Julie Bishop is one of the government’s most experienced figures, with 15 years in federal parliament under her belt, including four years as a cabinet minister in the Howard government.

Yet she has faced a baptism of fire as foreign affairs minister, with revelations Australia had tapped the phone of Indonesian President Susilo Bambang Yudhoyono and other senior officials.

Indonesia’s outrage – confected or otherwise – over the alleged spying represented the first major challenge for Ms Bishop in her new role, with the Indonesian president threatening to suspend cooperation on managing people smuggling and cyber crime.

Ms Bishop has since travelled to Indonesia in an attempt to re-establish normal relations between the two countries. While it is too soon to assess whether her efforts will pay dividends, early signals from Indonesia have been positive.

Added to this, Ms Bishop was forced to clarify the government’s stance over a territorial dispute between China and Japan after she was dealt a rare public rebuke from China’s foreign minister during a visit to Beijing.

Despite these teething problems, there is little doubt Ms Bishop has the experience and the cool head required to take on one of the most challenging portfolios in government. 

- Michael Ramsey


Subscription Options