The ‘iron lady’ is opening an $11bn mine as rivals cut investment and her children vie for more control
It has taken two decades to develop, $11bn of investment to build and is at the centre of a bitter family feud. But Gina Rinehart, Australia’s richest person, is finally poised to achieve her ambition and that of her late father, Lang Hancock, to develop, own and operate an iron ore mine.
“This is the holy grail she has been aspiring to her whole life,” says Michael Yabsley, a former adviser, of the Roy Hill project that formally opens next month. “It’s Gina’s crowning glory.”
The first ore exports from Roy Hill, 1,100km from Perth, will be a landmark moment for Hancock Prospecting, a private company controlled by the 61-year-old heiress who has earned the nickname “iron lady” as much for her uncompromising personality as the commodity that built her family’s fortune.
Up to now, Hancock Prospecting has earned most of its revenues by claiming royalties on iron ore tenements — government permits for the exploration and development of land — discovered in the Pilbara region of Western Australia, which were developed by mining companies such as Rio Tinto.
But by partnering with steelmakers in Japan, Taiwan and South Korea and executing the world’s largest mine financing deal, Mrs Rinehart is transforming a company founded 60 years ago by her prospector father into a rival of Rio, BHP Billiton and Brazil’s Vale.
Following the biggest mining investment boom since the 1850s gold rush — a phenomenon driven by China’s rapacious appetite for steel to build its cities — these mining companies are now reining back investment and slashing costs.
Mrs Rinehart, in contrast, is making the biggest gamble of her career.
Critics say her prize project, in which she owns a 70 per cent stake, could not be opening at a worse time as a cooling Chinese economy dampens demand for the ore , the key ingredient in steel. Iron ore prices have fallen to $53 since peaking at $190 in 2011 and some analysts forecast Roy Hill will struggle to turn a profit. “It is a high hurdle given the significant upfront capital expenditure,” says Ivan Szpakowski, commodities analyst at Citi.
The rout in commodity prices and slowdown in mining investment are hurting the Australian economy, which is growing at an annual rate of 2 per cent of gross domestic product, below its long-term trend of above 3 per cent. It is also eating into Mrs Rinehart’s fortune, which BRW magazine estimates at A$14bn ($10.1bn), down from a peak of A$29bn in 2012 when it listed the executive chairman of Hancock Prospecting as the world’s richest woman.
“Everyone involved in our company at the time, and others outside our company also, thought it was the wrong decision,” says Mrs Rinehart, referring to Hancock Prospecting’s acquisition of the Roy Hill tenements in 1992. “I was acting against the recommendations of key staff . . . but I shared my father’s vision and desire for northern development.”
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