Gina Rinehart’s Hancock Prospecting has attempted to deliver a fatal blow in the battle to guard its iron ore riches, unearthing a 34-year-old memo showing its rival mining dynasty knew it had no right to the royalties it is now demanding.
The explosive claims were delivered on Wednesday during the high-stakes West Australian Supreme Court civil case being waged by the descendants of mining pioneer Peter Wright over a mining tenement they claim he discovered alongside business partner Lang Hancock.
Western Australia’s mining dynasty, of which the nation’s richest person Gina Rinehart is the most famous member, is embroiled in a court fight over the rights to the Hope Downs projects in the state’s iron-rich Pilbara region.Credit: Marija Ercegovac
The showdown has pitted Hancock’s daughter Rinehart against the billionaire heirs to Wright’s empire, including his daughter Angela Bennett and his son Michael Wright’s children, Leonie Baldock and Alexandra Burt.
For 13 years, Wright Prospecting has claimed it is entitled to half of the royalties streaming out of the Hope Downs mines Hancock Prospecting co-owns with Rio Tinto under a 1980s “HanWright” partnership deal.
But Noel Hutley SC told the court it had evidence the controlling minds behind Wright Prospecting had known for more than three decades that they weren’t entitled to a single cent.
A 1989 memorandum addressed to and signed off by Peter Wright’s children, Angela and Michael, offered a breakdown of the partnership’s assets and their respective interests.
Hutley told the court any ambiguity over rights to the asset was laid to rest by the summary, which placed Hope Downs, including the half formerly known as East Angelas, squarely in the hands of Hancock Prospecting.
“A memorandum has gone to the controlling mind of Wright Prospecting,” he said.
“One would expect if he, Mr Michael Wright, was of the view that these individuals who created this were attributing ownership to Hancock Prospecting of assets which he understood his company had a 50 per cent interest, you’d expect there would be some response expressing dissatisfaction with what might be called a dangerous disregard of the proprietary interests of Wright Prospecting.”
And the document, according to Hutley, left not a shred of doubt about whether Wright’s descendants would ever be entitled to a royalty.
“Interestingly, you’ll see that the royalty listed under Hope Downs 1 to 3 and East Angelas is zero,” he told the court.
“There’s nothing. There’s no royalty due and payable in respect of it.
“That is wholly at odds with the contention advanced by Wright Prospecting in this case.”
Hutley said this was contemporaneous evidence that Hancock Prospecting’s reading of the 1987 agreement was correct.
The following week, a proposal was floated to bring East Angelas under the control of the “Hanwright” partnership.
But Hutley said that went nowhere, and now served as powerful evidence that neither Wright Prospecting nor Hancock Prospecting regarded it as jointly owned.
The memorandum appears to contradict evidence tendered by Wright Prospecting, which it said showed the Pilbara iron ore site that has netted Hancock Prospecting billions of dollars was always meant to be shared.
Wright maintains it is entitled to a half-share of the royalties from Hope Downs, now home to four operational mines deemed the country’s most successful, because it never relinquished its partnership interest in the asset.
Hancock’s refusal to produce these royalties, Wright alleges, leaves it in breach of its duties to the partnership agreements inked between 1978 and 1987, Wright argues.
The claims followed several hours of argument over whether Wright Prospecting’s right to relief was time-barred and whether they should have access to profits borne only out of the risks Hancock Prospecting took in bringing the mine to fruition.
Hutley told the court reports assessing the deposit’s commercial viability showed it was a risk-rich development, and insisted Hancock should not be denied the benefits taking those risks afforded it.
“One cannot stand by with knowledge of the facts while another person takes all the entrepreneurial risk and then seek to deprive the person of the entrepreneurial benefit,” he told the court.
Hancock Prospecting is expected to conclude its opening submissions on Friday.
Wright’s descendants aren’t Rinehart’s only legal opponents, with her eldest children, John Hancock and Bianca Rinehart, also expected to argue their claim for a stake in the legacy on Monday.
The heirs to the company of her father’s former business associate Don Rhodes are also hoping to get a slice of the asset.
The trial continues.
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