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Billionaire Rinehart Seeks More Royalties From Rio Tinto
Apr 24,2012 10:28CST
industry news
Source:SMM
Gina Rinehart, Asia’s richest woman, said Rio Tinto Group (RIO) owes royalties to her company and partner Wright Prospecting Pty. on 12 years of production at two mines in Australia.

Gina Rinehart, Asia’s richest woman, said Rio Tinto Group (RIO) owes royalties to her company and partner Wright Prospecting Pty. on 12 years of production at two mines in Australia.

The payments amount to 2.5 percent of ore sales at the Channar and Eastern Ridge mines, Wright’s lawyer Rod Smith said in New South Wales state court in Sydney today. Rinehart’s Hancock Prospecting Ltd. and Wright are suing Rio Tinto’s Hamersley Iron Pty. unit to recoup royalties they say are owed.

Rio Tinto, the third-biggest miner, sought to split the case into separate trials to determine whether it owes the money and how much the royalties are worth. Matthew Darke, the London-based company’s lawyer, said determining the amount would require examining more than 1,000 boxes of documents at an estimated cost of more than A$600,000 ($621,000).

“Rio knows how to do the calculation” using the mining company’s sales and production records, Smith said.

In an unspecified sample month, the mines produced 951,742 tons of ore, Smith told Supreme Court of New South Wales Justice Robert McDougall today, citing documents from Rio Tinto. The net output attributable to the royalties and revenue received were confidential, he said.

Officials at the court last week said the documents related to the case weren’t available because they were being used to prepare for today’s hearing.

McDougall ordered Rio Tinto to submit a calculation of the royalties to Hancock and Wright to consider. If the sides couldn’t agree on an amount acceptable to all, they could get involved in a “mega-litigation, and you are mega-parties” who can deal with the costs, he said.

Lang Hancock
Rinehart inherited iron ore mining assets from her father, Lang Hancock, who, with E.A. Wright, negotiated the first agreements with Rio Tinto in 1961 and 1962 to develop the Pilbara region in Western Australia state, according to Hancock’s web site.

Wright, which is controlled by the children of the founder E.A., and Hancock are basing their royalty claim on a 1970 agreement between the parties, Darke said.

Rio Tinto is paying royalties on ore produced at Mount Tom Price, Marandoo and Paraburdoo mines, Mark Bickerton, a Hancock spokesman, said in an e-mail last month. Hancock has also sued in the Supreme Court of Western Australia claiming it’s owed royalties on other properties. Hancock receives no royalties from Rio Tinto’s biggest mine, Yandi, or its Robe River operations, Bickerton said.

As iron ore prices surged on demand from China, the royalties propelled Rinehart to 30th on the Bloomberg Billionaires Index, with an estimated net worth of $18.7 billion as of today.

The case is: Wright Prospecting Pty v. Hamersley Iron Pty. 2009/00323345. New South Wales Supreme Court (Sydney).

 

Gina Rinehart
Rio Tinto
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