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Old partners unite for Rio royalty fight

The High Court of Australia will make the final call on a $200 million royalty dispute between Rio Tinto and the heirs of the prospecting partnership between Lang Hancock and Peter Wright.

The dispute sees Gina Rinehart’s Hancock Prospecting form a rare legal alliance with Wright Prospecting to argue Rio Tinto should be forced to pay royalties on two Pilbara iron ore projects sold to the company by the partnership in the 1970s.

The Rio subsidiaries briefly lost control of the deposits, which host the Channar and Eastern Range mines, in the 1970s. Rio argued the loss of control meant it was not required to pay royalties.

Hancock and Wright won the first round of the argument two years ago when the NSW Supreme Court ruled in favour of the pair, in a decision estimated to be worth up to $200 million to the privately owned mining companies.

Last year, the NSW Court of Appeal partially reversed that decision, ruling there was no continuity of title over Channar, about 60km south of Tom Price.

Today, Rio owns 60 per cent of the Channar mine in a joint venture with China’s Sinosteel.

The joint venture was signed in 1987, and at the time was considered a ground-breaking China-Australia agreement.

It is believed the Channar reversal would strip up to $80 million from back royalties owed by Rio.

Both sides of the argument appealed to the High Court, which said last month it would hear appeals from both Rio Tinto against the original decision, and from Hancock and Wright on the Court of Appeal reversal.

The matter is likely to be heard in August.