View Comments
Feud threatens massive mine
Feud threatens massive mine

The Rinehart family brawl threatens to throw into doubt Gina Rinehart's ability to attract funding for the $10 billion Roy Hill mine in the Pilbara, her flagship project which could massively add to her wealth.

The legal dispute between Mrs Rinehart and three of her children comes in the middle of commercially sensitive negotiations between Mrs Rinehart and potential financiers over ways to pay for the construction of the mine and associated rail and port operations.

Roy Hill is expected to be one of the world's most lucrative mines once it opens in late 2014.

It should produce 55 million tonnes of iron ore a year and generate billions of dollars in profits for the Rinehart family over its life.

In comparison, Andrew Forrest's Fortescue Metals Group made just over $1 billion last financial year after producing 44 million tonnes of iron ore and shipping it to steel works in China.

Mrs Rinehart's lawyers warn that the dispute over control of the Hope Margaret Hancock Trust, which holds 23.4 per cent of Hancock Prospecting's shares, threatens to derail Mrs Rinehart's chances of funding the project.

She needs to borrow several billion dollars to build the mine, a 320km rail line to Port Hedland and port infrastructure. She is also negotiating to sell a share in Roy Hill to potential partners .

But with her children fighting to control nearly a quarter of the company, it is unclear how bankers would view the entry of potentially hostile shareholders to the Hancock register, particularly if they demand a seat on its board or push to distribute the hundreds of millions of dollars the company already gets from agreements with Rio Tinto.

In an affidavit last year, lawyers for Mrs Rinehart told the NSW Supreme Court that senior Hancock executives believed "potential financiers and/or investors of capital are likely to be unsettled by disputes regarding the beneficial ownership of shares in (Hancock)".

They said adverse effects such as delays in enabling equity participants and raising substantial finance could hold the project back.

Significant delays could mean Hancock losing its prized berth at Port Hedland port to rival miners, which could kill the project.

Without a way to ship its ore, the mine could not go ahead and Hancock would be reduced to the same position as other mining hopefuls and forced to jostle for port space.