Rinehart Keeps Quietly Bidding

By February 28, 2019News

Article by Terry McCrann, Herald Sun, February 27th

Australia’s richest woman and easily the single biggest individual taxpayer this country has ever had, Gina Rinehart, is quietly going about her business of building Australia’s fourth major minerals group.

It’s largely out of the public eye because unlike the “Big Three” — BHP, once “the biggest Australian”, Rio Tinto and Andrew “Twiggy” Forrest’s Fortescue — Rinehart’s still rather quaintly named Hancock Prospecting is privately owned and so not listed on the stock exchange.

I say quaintly, because it’s long since gone well past the “prospecting” stage.

Its ownership, by the by, is 76.55 per cent directly by Rinehart and the other 23.45 per cent by her daughter, Bianca Hope, as trustee for a trust for Rinehart’s four children.

Like the “Big Three”, Hancock is built on iron ore.

It’s got a 50-50 jointly owned mine with Rio which produces 45 million tonnes a year and it has 70 per cent of, developed and now runs, the Roy Hill mine which is up to 55 million tonnes a year and heading for 60 million.

At an iron ore price of over $120 a tonne you can do your own math. But we do know from the Tax Office’s annual disclosures that Hancock pours hundreds of millions of dollars of tax into Canberra each year.

Iron ore is Rinehart’s main game. Last year Hancock took over the ASX-listed Atlas Iron; but more like an old-style resources and pastoral house, it also has interests in coal, beef and dairy.

Now it’s made its biggest move offshore — preparing to spend as much as $600 million buying a coking coal project in Canada. Hancock is already a 20 per cent shareholder in project owner Riversdale Resources — an Australian company although its only asset is the coal resource in Alberta Canada.

It’s making a two-tier and open-ended offer. The offer starts at $2.20 and will go to $2.50 if Hancock gets to 50.1 per cent. Hancock will take as many or as few shares that accept.

As the target’s founding shareholders intend to accept for their combined 16.5 per cent stake, Hancock looks assured of both getting control and paying accepting holders the higher price.

It’s persuasive on two levels: first the attractive offer price, and then having the committed backing of Rinehart and her cash flows for the finance needed to develop the project.