Mediation rejected between Australian mining magnate, kids

Reuters News
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Posted: Sep 12, 2012 12:45 AM
Mediation rejected between Australian mining magnate, kids

By Narayanan Somasundaram

SYDNEY (Reuters) - An Australian judge rejected a request on Wednesday for mediation between Asia's richest woman and her three children in a dispute over a multi-billion dollar family trust, saying there was little chance of a settlement.

The case, which started being heard in the New South Wales Supreme Court on Wednesday, is an unwelcome distraction for mining magnate Gina Rinehart as she scrambles to secure funding for a $10 billion iron ore mine.

It also brings more unwanted public scrutiny of Rinehart, who has become more vocal on policy matters but prefers keeps her personal life under wraps.

Lawyers for Ginia Rinehart, the only child to side with her mother in the family feud, asked that a mediator be appointed to hear the attempt by three of her siblings to have Gina Rinehart removed as trustee.

At stake is access to a near-one-quarter share in Hancock Prospecting, one of the world's largest privately-owned mining companies.

Hancock Prospecting Pty Ltd is developing what would be Australia's fourth-largest iron ore mine and generates hundreds of millions of dollars a year in royalties from rich iron ore tenements secured by Gina Rinehart's father Lang Hancock, a legendary figure in Australian mining history.

"Ginia had a most genuine interest in moving the case to mediation without further public ventilation of this very unhappy family dispute," Ginia's lawyer Francois Kunc said.

Justice Paul Brereton rejected the request.

"Nothing has emerged at this stage which would suggest a mediation at this stage had a high prospect for success," he said.

The dispute has already caused a delay at Hancock's flagship Roy Hill iron ore mine, rail and port project in Western Australia, which is now running into some stiff headwinds from slowing China demand and soaring costs.

A halving in iron ore prices over the past year has dented both investor appetite for such projects and the 58-year-old widow's fortune, estimated by Forbes in February at around $18 billion.

FAMILY TIES

Rinehart has been putting some of her vast wealth to work with purchases of media companies Fairfax Media and Ten Network Holdings in the past year, causing some consternation among the chattering classes.

Her opposition to taxes and calls for miners to be allowed exemptions from laws restricting the use of foreign labor have also put her on a collision course with government and unions.

Recently, Rinehart warned Australia was becoming too expensive for mining firms which she said could hire workers for under $2 a day in Africa.

Rinehart, known as the Pilbara Princess, has a long history of controversy and has played out much of her life in the media spotlight.

She is the only child of Hancock, a larger-than-life character credited with discovering the world's largest deposit of iron ore in Pilbara, Western Australia.

Rinehart learned the business at her father's knee and, after a prolonged battle with his third wife following Hancock's death in 1992, cemented control of Hancock Prospecting.

Rinehart owns three-quarters of Hancock Prospecting and is the sole trustee of the family trust which holds a further 23 percent of the company for the benefit of her four children.

Last year, just days before the trust was due to vest, Rinehart changed the vesting date to 2068 and sought changes in the trust documents, prompting her three eldest children -- Hope Rinehart Welker, Bianca Rinehart and John Hancock -- to fight to have her removed as trustee.

E-mails made public as part of the fight to keep the case private showed Rinehart told the children the vesting of the trust would likely trigger crippling capital gains tax liabilities for them. She also described the elder trio of children as being lazy and spoilt, and warned that their security would be at risk if they persisted with the action.

London-based Ginia and her mother have been seeking to force Australian media to hand over correspondence with John Hancock over the dispute.

The early skirmishes in the family feud delayed the sale of equity stakes in Roy Hill, Rinehart has previously said.

South Korean steel giant POSCO, Japanese trading company Marubeni, South Korea's STX Corp, and Taiwan's China Steel Corp hold a collective 30 percent stake in the project, with Hancock Prospecting holding the remainder.

Hancock is currently trying to raise about $7 billion in debt funding to get the massive project into production.

It is not clear what impact, if any, the removal of Rinehart as trustee of the family trust would have on Hancock Prospecting and its iron ore, coal and media empire. Shares in the company can only be held by Rinehart and her direct descendants and cannot be pledged as collateral.

(Additional reporting and writing by Lincoln Feast; Editing by Raju Gopalakrishnan)