Article by Josh Chiat courtesy of Stockhead.
This year’s extraordinary and possibly never to be repeated run in iron ore profits has been rounded out with Gina Rinehart’s Roy Hill declaring a monster $4.4 billion profit.
Gina’s company Hancock Prospecting holds a 70% in the Roy Hill mine, the fourth largest iron ore mining operation in Australia after the Pilbara empires of Rio Tinto (ASX:RIO), BHP (ASX:BHP) and Fortescue Metals Group (ASX:FMG).
The $4.4 billion FY2021 NPAT result was double the number produced in FY2020, leading Roy Hill to dish out $4.1b in fully franked dividends to shareholders.
A further $1.5 billion was paid out in October, delivering around $3.92 billion into the Hancock coffers.
The FY2021 dividend alone is more than nine times the maiden $475 million dividend declared by Roy Hill in FY2020.
Other shareholders of Roy Hill include Marubeni (15%), POSCO (12.5%) and China Steel Corporation (2.5%).
The Pilbara mine’s run rate hit a record of 60Mtpa in the fourth quarter of the 2021 year, with Roy Hill declaring it has paid off its revolving credit facility.
Rinehart managed to secure US$7 billion in debt as the mining downturn began in 2014 to build the $10 billion mine.
“The remarkable performance of Roy Hill on all fronts reflects a high degree of planning and execution excellence, the ongoing agility of the business to adapt to challenges, and the dedication of our people,” Rinehart, also Roy Hill’s executive chairman, said.
Rinehart takes aim at red tape … again
The news served as an opportunity for Rinehart and her soldiers to take aim at her favourite bugbear, government red tape.
“We have to remember that Australia exports its ore internationally, so we have to be cost competitive internationally, hence we should be wary of onerous government cost burdens that don’t encourage investment,” she said.
“It’s time we out greater priority on reducing government tape, and our government in turn, put greater priority on welcoming investment and enabling living standards to grow instead of growing government tape.”
What happened in the rest of the market while Gina was enjoying a casual swim in her billions?
Iron ore stocks defied weakness in the price of Australia’s headline commodity to record light gains across the board.
Mineral Resources (ASX:MIN) was one of the top performers with a 3.45% gain after boss Chris Ellison said it would push on with expansion plans despite contracting margins for its higher cost iron ore mines.
Elsewhere lithium and nickel stocks were winners. Western Areas (ASX:WSA) and IGO (ASX:IGO) were both up as they lightly addressed takeover talks in their AGMs.
Neither would be drawn on the specifics of the deal but confirmed discussions and subsequent due diligence, first revealed to the market 3 months ago were ongoing.