Rio Tinto loses battle against Australian billionaires
14 May 2013
Global mining giant Rio Tinto Group has lost a legal battle on iron ore mining royalties against two of Australia's riches women, Gina Rinehart of Hancock Prospecting Pty Ltd (HPPL) and Angela Bennet of Wright Prospecting Pty Ltd (WPPL).
The two business partners-turned-rivals have sued Rio Tinto's wholly-owned subsidiaries Hamersley Iron Pty Ltd (Hamersley) and Mount Bruce Mining Pty Ltd (MBM) over the rights of iron ore in a 150 sq.km area in the prolific Pilbara Region of Western Australia.
They claimed that Rio Tinto owed them royalties for over 20 years based on an agreement dating back 1970, struck between iron ore magnate Lang Hancock and his partner Peter Wright. The royalties relate to Channar and Eastern Ridge iron ore production areas.
The New South Wales supreme court judge David Hammerschlag ruled that Rio Tinto subsidiaries owed the royalties to HPPL and WPPL under the agreement in which it agreed to pay 2.5 per cent on iron ore sales from the mines.
''WPPL and HPPL are entitled to be paid, and MBM is obliged to pay them, the royalty under the 1970 agreement in respect of ore mined in Eastern Range and Channar,'' the ruling said.
WPPL and HPPL have contended that the ''MBM area'' defined in the agreement includes both Eastern Range and Channar and is the physical area within the defined temporary reserve blocks. And liability to pay royalties is that of MBM and Hamersley jointly as they were the purchasers of the property.
Rio Tinto argued that MBM area has a more restricted meaning and the areas and blocks defined are not references to physical areas covered by the temporary reserves.
The miner also claimed that it is not liable to pay the royalties to the descendants of Hancock and Wright because it did not control the land continuously, having lost control in 1974 for a few years and regaining it in 1979.
Allan Myers, the counsel for Rinehart and the Wright family argued that the miner's refusal to pay because there was a ''gap'' in control was ''commercial nonsense'' and not what was intended when the agreement was struck in 1970.
The claim amounts to $200 million on account of lost royalties, according to the plaintiff's lawyer. The miner had earlier agreed to the approximate amount if found liable.
The global miner said yesterday that it was examining the supreme court ruling and considering its options.
Separately, a legal fight between Hancock and Wright is going on over the huge but undeveloped iron ore resources of Rhodes Ridge deposit in the Pilbara, on the division of assets between the two rival families.
