Australia's iron lady may become world's wealthiest woman

Published by MAC on 2012-02-07
Source: Guardian, Advertiser, Australian, Reuters, ABC

Gina Rinehart grabs leading stake in media empire

Fairfax Media takeover sparks Australian ownership debate

Mining tycoon Gina Rinehart becomes biggest shareholder in group that owns the Sydney Morning Herald and the Age.

By Alison Rourke in Sydney

Guardian

1 February 2012

Australia's richest person, the mining tycoon Gina Rinehart, has become the biggest shareholder in one of the country's oldest and most important newspaper groups, sparking debate about the concentration of media ownership.

Rinehart, chairwoman of the mining giant Hancock Prospecting, is estimated to be worth more than A$10bn (£6.7bn).

She has reportedly acquired nearly 13% of Fairfax Media, which owns three national daily papers, including two of the main broadsheets in Sydney and Melbourne (the Sydney Morning Herald and the Age) as well as the Financial Review and a number of radio stations.

"Clearly, she is seeking to exert her influence," the federal communications minister, Stephen Conroy, told ABC radio. "But is she breaking the law? No."

As well as her stake in Fairfax Media, Rinehart also owns 10% of commercial television network Ten, where she holds a board position.

Senator Conroy said Australia needed stronger media regulation, an issue under review in a media inquiry due to report in March.

"What we have to ensure is that we have diversity of opinion and ownership," he said.

Rupert Murdoch's News Limited is the major player in the Australian newspaper market, owning 150 national, capital-city and suburban news brands, including the only national newspaper, the Australian. In four capital cities (Brisbane, Darwin, Adelaide and Hobart), Murdoch owns the only daily newspaper. News Limited also dominates the Sunday newspaper market, with about 70% of readership.

The media analyst Peter Cox, from Cox Media, said: "If Rinehart continues to increase her stake in Fairfax media, it could leave us in a situation where nearly all our major daily papers are controlled by just two individuals."

Cox said the Australian market was different to that of the UK, where the papers reflected diverse opinions from the left and right.

Rinehart is known to oppose the Labour government on several big reforms including a new tax on mining profits and the carbon tax, due to start in July. Her wealth has soared over the past few years because of the iron ore mining boom.

The Greens, who hold the balance of power in the upper house of parliament, also say Rinehart's move on Fairfax Media must be a catalyst for cross-media ownership reform.

"In a healthy media market with wide diversity of ownership, it matters much less when mining billionaires buy media assets with the clear intention of influencing the political debate," said the Green senator Scott Ludlum. "In a market as highly concentrated as Australia's, it matters a great deal."

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Gina Rinehart pushes for more influence on the media with Fairfax bid

By Giuseppe Tauriello

The Advertiser

2 February 2012

MINING magnate Gina Rinehart has swooped on the country's second-largest newspaper company.

And it has been widely viewed as an attempt at exerting even more influence on the country's media and political landscape.

As Australia's richest person, with estimated wealth nearing $20 billion, Ms Rinehart - who is fighting a bitter legal battle with her own family - already has the ear of politicians and the media.

But her latest power play, a bid for 10 per cent of Fairfax Media, is expected to provide another strategic platform from which to push her business and political agenda.

And particularly so if she is successful in securing a seat at the board table, which would become her second directorship of a media organisation following her entry to the Channel 10 boardroom in 2010.

Questioning the motive of the raid, cynics point to the bleak economic forecast for the media industry - hit by falling advertising revenue and the growth of online news sources. Media analyst Peter Cox says the bid is politically driven.

"There's no way you'd be buying into either Ten or Fairfax as a financial investment for the future in the media," he said.

"What's the point of spending that money on it if you're not going to have influence?"

Fairfax - which owns The Sydney Morning Herald, The Age, The Australian Financial Review and a string of radio stations - reported a $391 million loss last financial year after a $651 million deterioration in the value of its mastheads, customer relationships and goodwill.

Ms Rinehart's investment comes as analysts downgrade their forecasts for the media sector. Fairfax and other media groups have responded with aggressive cost-cutting, including a company-wide program to cut $85 million from its cost base.

On Tuesday night, Ms Rinehart made a $191 million bid to acquire almost 10 per cent of Fairfax, adding to the 4.9 per cent she bought a year ago for $50 million.

Late yesterday her shareholding reached 12.8 per cent, making her the largest shareholder of the company. Shares in the company soared more than 10 per cent.

However, while a 15 per cent holding would be viewed as a "friendly stake", analysts say it is the influence Ms Rinehart would wield at the board table that may put into question the editorial integrity of the Fairfax brand.

Macquarie media analyst Alex Pollak warned what a board position could mean.

"In the event she does try to influence editorial policy at Fairfax, it will be one more problem for the board in trying to keep church and state in an editorial sense separate," he said.

The Fairfax family's sell-off of its remaining interest in the company opened up a board position following the resignation of Nicholas Fairfax. Ms Rinehart's path to the boardroom will not be clear, however, with one of the company's largest shareholders already disapproving of the move.

Orbis Australia, which has a 7.29 per cent stake, questioned whether Ms Rinehart had "sufficient aptitude" for a board position, and believes shareholders support this view. The board too has the power to appoint additional directors, meaning remaining shareholders may be powerless to her ambition.

Minter Ellison partner Jennifer Tobin said that while major shareholders were frequently given the right to a seat at the board table, there was no guarantee Fairfax's largest shareholder would be given the green light.

"Whether or not they choose to appoint Gina will be their decision, based on what they think is in the best interests of the company and its shareholders," she said.

Given the absence of a significant shareholder, Fairfax also remains vulnerable to a complete takeover by Ms Rinehart. Mr Cox believes she will take advantage of this position.

"I don't think having one seat on the board would give her all the influence she would be seeking," he said.

"So I think it's possible she'd want to go on, buy more shares, get greater control and end up as the effective controller of Fairfax."

If Ms Rinehart does succeed in becoming a director, she will have direct access to two of the country's largest media organisations.

In 2010 Ms Rinehart bought a 10 per cent stake in Channel 10 for $166 million, where she sits as a director alongside News Corporation's Lachlan Murdoch.

Her move on Fairfax comes at a critical time for the media industry as the Federal Government prepares to release the final report of its Convergence Review.

It is expected the report will recommend cross-media ownership laws effectively be scrapped, meaning she could continue to build her interests in Ten and Fairfax without the latter needing to divest its radio stations.

This would give her an even broader platform from which to push her views.

Yesterday Communications Minister Stephen Conroy said he wanted new laws to include a public interest test on media diversity.

"Clearly she is seeking to exert her influence," he said. "Do we need stronger laws in this area? Yes."

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Stakes raised as Posco play makes Rinehart a $20bn woman

By Andrew Burrell

The Australian

21 January 2012

WHEN South Korean steel giant Posco moved this week to acquire 15 per cent of Gina Rinehart's next money-spinning mine in the Pilbara, it unwittingly upped the stakes in a war that is tearing apart the billionaire's family.

Posco confirmed from Seoul that it would spend about $1.5 billion to become a key investor in Rinehart's Roy Hill project, which is scheduled to begin shipping iron ore within two years.

To the boffins who crunch the numbers for the annual Forbes and BRW magazine rich lists, Posco's valuation of Roy Hill is a "crystallising event" in helping to estimate the rapidly growing fortune of Australia's richest person.

It means they can ascribe a notional value of about $10bn to the Roy Hill prospect.

And it means Rinehart's estimated personal wealth is set to grow to at least $20bn on this year's rich lists, as a result of Roy Hill, her half share in the highly profitable Hope Downs joint venture with Rio Tinto, the $125 million in iron ore royalty cheques she banks each year and other smaller investments, including stakes in Fairfax Media and Ten Network. That's double last year's $10bn estimate, which did not include Roy Hill.

Such is the extent of Rinehart's eye-popping wealth, she is now on course to become the world's richest woman.

If she can obtain debt funding for Roy Hill and successfully bring it into production, and assuming iron ore prices stay strong, she could soon overtake Walmart heiress Christy Walton's $US26.5bn ($25.54bn) at the pinnacle of Forbes' global rankings.

It's estimated Rinehart's 50 per cent share of Hope Downs is generating about $1.7bn in annual profit, as a result of fat margins involved in digging up iron ore for $40 a tonne and shipping it to China for $140 a tonne.

The mine is due to expand its annual production from 30 million tonnes to 45 million tonnes later this year, which would lift Rinehart's profits to more than $2.5bn a year.

Rinehart is also sitting on plenty of cash after Indian group GVK paid $US1.26bn last year for majority stakes in three of her Queensland coal projects.

The money due from Posco will boost her cash reserves. It's a spectacular achievement for Rinehart, who inherited a debt-laden Hancock Prospecting from her father, Lang Hancock, the legendary prospector who pegged vast tracts of red dirt in Western Australia's Pilbara.

The news that Rinehart, 57, is now worth $20bn won't simply be a source of fascination and envy to ordinary Australians struggling with the cost of living.

It will also be eagerly noted by her three eldest children (John Hancock, 36, Bianca Rinehart, 33, and Hope Welker, 26).

They are suing Rinehart in the NSW Supreme Court in an ugly battle over their inheritance.

And it will be of even greater interest to Rinehart's daughter Ginia, who is the only one to have sided with her mother in the dispute and becomes the most likely heir apparent to the family empire.

Rinehart appointed Ginia on December 5 as a director of the family's flagship Hancock Prospecting.

A few weeks earlier, Ginia was named a director of Hope Downs Marketing Company, the joint venture with mining giant Rio Tinto that runs Hope Downs.

Ginia will learn about running a big mining project sitting on a board alongside hardened veterans, who include Rio Iron Ore senior executives Greg Lilleyman, Paul Shannon and Warwick Smith.

Ginia also replaced her elder sister, Bianca, on the board of family company HMHT Investments, which is linked to the Hope Margaret Hancock Trust at the centre of the dispute in the NSW Supreme Court.

The four children are beneficiaries of the trust, which controls about 25 per cent of Hancock Prospecting and was set up by Lang Hancock. But John, Bianca and Hope are attempting to remove Rinehart as the trustee.

Reading the tea leaves at the House of Hancock has never been easy.

At various times, Rinehart has groomed John and Bianca to take the reins of the business one day.

But Bianca left Perth a couple of years ago to start a family.

And John changed his name by deed poll in the early 2000s -- from Rinehart to Hancock -- after a bitter falling-out with his mother.

A sign that Hope was also on the outer came in an announcement last year that her husband, American Ryan Welker, had resigned after a short stint as Rinehart's representative on the board of Perth mining company Mineral Resources.

The resignation occurred just weeks after Hope and her two siblings launched the legal action.

Rinehart won't talk about her succession plans and a request yesterday for comment on the significance of the Posco deal was met with a polite refusal.

"There is no comment at this time," Hancock Prospecting spokeswoman and former state minister Cheryl Edwardes said.

"At the appropriate time, if there is to be a comment, I will keep you in mind."

Even the details of the court battle have remained shrouded in secrecy after Rinehart applied to suppress them.

But time appears to be running out for the intensely private Rinehart to keep hidden the reasons her children are suing her.

The NSW Court of Appeal found yesterday that disclosing information on the case could be embarrassing for Rinehart but would not expose her to any financial loss.

The judges ordered a suppression order to remain in place until February 3.

So unless Rinehart can convince the High Court to intervene, it appears the family's dirty linen is set to be aired.

Rinehart is said to be deeply saddened by the ugly dispute with her children and has thrown herself into her work.

This, after all, is a once in a lifetime mining boom and there are billions more dollars to be made.

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Australia's iron lady on road to be world's wealthiest woman - Forbes

Reuters

2 February 2012

SYDNEY - Australian Gina Rinehart could soon become the world's wealthiest woman after amassing an $18 billion fortune from mining and media investments, Forbes magazine says in its latest list of the wealthiest people in Australia.

The 57-year old widow saw her fortune almost double after a deal signed last month that will see South Korean steel giant POSCO take a 15 percent stake in her Roy Hill iron ore mine in Western Australia's Pilbara iron belt.

The deal valued the project at $10 billion, boosting Rinehart's fortune dramatically.

In the next few years, Rinehart also has plans to expand her iron ore operations and develop two coal collieries.

If commodity prices hold up, Rinehart could challenge Christie Walton, worth $24.5 billion, as the world's richest woman, Forbes said.

Walton is the widow of John Walton, one of the sons of Sam Walton, the founder of retail chain Wal-Mart Stores.

For now, Rinehart will have to be content with being the Asia-Pacific region's wealthiest woman, based on Forbes' tally.

Rinehart is the daughter of Lang Hancock, an Australian prospector credited with discovering giant deposits of iron ore in the 1950s that now make up Australia's largest export base.

China alone relies of Australian iron ore for nearly half its imports of the key steel making ingredient, and Japan, South Korea and Taiwan also are big buyers for their steel mills.

Compared with other ultra-rich like Microsoft founder Bill Gates and Facebook's Chief Executive Mark Zuckerberg, the source of most Rinehart's wealth is downright low-tech.

Iron ore is just extracted from giant pits resembling excavation sites found in the 500,000-square-kilometer, or 190,000-square-mile, Pilbara, the single largest source of iron ore in the world. Ore is simply churned up by bulldozers and carted in trucks to waiting open-topped rail cars.

"Pilbara Princess"

Known as the "Pilbara Princess", Rinehart is also building stakes in some of Australia's largest media companies, drawing comparisons to another famously powerful Australian, Rupert Murdoch, head of News Corp and now a U.S. citizen.

Rinehart this week became the largest shareholder in Fairfax Media by more than tripling her stake in the newspaper, digital and radio broadcasting company. She already owns 10 percent of rival Ten Network Holdings.

Her move into media is raising concerns among politicians, namely the left-leaning Labor party of Prime Minister Julia Gillard, whose views on who should control the Australian mining sector differs from Rinehart's.

"It has always been the case in Australia over my lifetime in politics that a small number of families have had a controlling interest in the majority of the media in this country," Communications Minister Stephen Conroy said.

"All that's really changing is that a different wealthy individual is taking a strategic or ownership position in some media," he said.

"Clearly she is seeking to exert her influence," he said.

Opposition party treasurer Joe Hockey, whose political party bent is more in line with Rinehart's conservative views, has called her simply "a good person, a good Australian."

In a rare public display, Rinehart joined another Australian billionaire, Andrew "Twiggy" Forrest, to protest against the government's introduction of a special mining tax and was heard chanting "Axe the Tax."

On the environment, Rinehart is also at opposites with Gillard, who introduced a carbon tax.

Her views on how to tackle greenhouse gas would make climate activists such as Al Gore wince.

"What good will adding a carbon tax do in Australia?" Rinehart wrote in an industry journal last year in comments published in the Australian newspaper.

"Will a tax in Australia bring down carbon dioxide emissions elsewhere? No."

She is also outspoken on Australia's immigration policies, arguing miners should be allowed to bring in cheap labour .

Rinehart is regarded as iron ore's princess because her father -- who she is said to emulate in many of his conservative views -- was the undisputed king, who drew loyal subjects and detractors in equal measure.

But since his death in 1992, Rinehart as executive chairman of Hancock Prospecting Pty Ltd almost single handedly transformed the family owned company into an international force.

Stories of her father's role in establishing an asbestos mine, dealings with the brutal Romanian dictator Nicolae Ceausescu and harsh views on the unemployed are often repeated.

Rinehart, although reportedly fiery and unlikely to suffer fools for long, is said to abhor emotional outbursts in her employees and applauds a cool head.

She also has financially contributed to a range of social causes in sport, health and medical research, including the Hancock Family Breast Cancer Foundation.

Rinehart avoids media interviews, especially now as she fights to keep details of a family legal battle out of the public eye.

Three of her children are trying to oust her as trustee of a multi-billion-dollar family trust, set up by her father before he died.

Little is known about the family feud as a number of suppression orders have prevented the reasons becoming public.

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Media just a pebble in the shoe of Big Mining

Tony Maher 

ABC-Net comment

16 February 2012

There's been much hand-wringing about the impact Gina Rinehart's buy-up of Fairfax shares will have on editorial standards at its popular mastheads.

Fair enough. Any more exposure to the views of her preferred mouthpieces Ian Plimer, Andrew Bolt and Christopher Monckton would push the average Australian well over the safe daily limit of exposure to unsubstantiated bluster and fallacy.

Though as last year's carbon and minerals tax debates showed, newspapers don't need to be owned by mining magnates to prosecute the interests of Big Mining. It's just an added bonus.

The wealth and influence of the likes of Gina Rinehart are beyond the imaginations of most of us. Her fortune - $20 billion and growing - is generated by vast tracts of resource-rich land, fuelled by the record prices being paid for Australian resources by developing Asian economies.

When you're about to overtake Bill Gates as the richest person in the world, a non-compliant media is an annoyance, a pebble in the shoe. You don't need to own the media to have a good shot at getting your own way. The sheer scale of the investment decisions at your discretion attracts the attention of governments.

You don't need to own the media. But if you can afford it, you might as well.

Australia breeds a variety of mining magnate that attracts easy ridicule. Along with Gina Rinehart there's youngster Nathan Tinkler, who at 30 took a gamble on a coal mining lease he turned over for $275 million - he still looks surprised; Twiggy Forrest who led the charge against the mining tax and is being prosecuted by ASIC over allegedly misleading the market; and Clive Palmer, who you would draw if you picked 'capitalist' in Pictionary.

Unsophisticated to a fault, with their conspicuous excess, private jets and family trust brawls - it's easy to be distracted by the spectacle and lose sight of the extreme and dangerous agenda these people are promoting.

The diminishing independence of Australian media is to be deplored. But if we really want to worry about Gina Rinehart's influence, let's look bigger. Let's look at the shape and direction of the Australian economy into the next century.

Mining is growing at a phenomenal rate, transforming the Australian economy as it goes. We all know about the Australian dollar - driven up by the resources boom and sucking the life out of manufacturing and other currency-sensitive sectors like education, tourism and retail.

Fewer of us know about the social havoc being wrought in mining regions: exorbitant housing costs driving out families, upheaval caused by fly-in-fly-out workforces, roads dangerously crowded with trucks and commuters.

The challenge facing policy-makers is how to make sure the mining boom delivers more value than pain to the economy; that it delivers good, skilled jobs to Australians; that it builds rather than destroys regional communities; that the extraordinary profits being generated in the finite decades of the boom leave a positive legacy for future generations.

But sharing the benefits of the boom is not an agenda Gina Rinehart is interested in. Quite the opposite.

Rinehart's staunch opposition to the minerals and carbon taxes are well known; and her campaigning is not limited to her bizarre back-of-the-truck performance with Twiggy last year. Despite compelling evidence to the contrary, Rinehart is fond of telling business audiences that the slightest further tax imposition will see miners pack up their diggers and go to Africa.

But Rinehart's grand vision for mining is the creation of extensive special economic zones across Northern Australia.

The lobby group she spearheads, Australians for Northern Development and Economic Vision, argue that the special economic zones resources should essentially be tax free, with no resources, payroll or income tax collected.

But that's not all. Companies would not just import their steel and machinery but could import a low-wage workforce to build major projects as well.

"Making our projects too expensive to compete internationally only jeopardises Australia's future," says ANDEV's manifesto.

Hence, in these special Northern "economic zones", we should allow competitive and temporary short term workers to build our projects, say for a duration of up to two years nine months or so ... our Government could choose, if such workers had proven to be good workers and potentially good citizens, whether to extend their stay to a longer period.

ANDEV supporters, a collection of mining executives mostly based in Western Australia, find it grossly unfair that other industries can simply off-shore jobs to low-wage economies, but they are restricted by the realities of geography.

Various industries in Australia already make use of overseas countries labour without restriction - for example, sending work overseas to India and the Philippines and elsewhere in Asia where labour costs are lower. The group argues mining companies should be allowed to hire short term workers from overseas ... rather than becoming uncompetitive.

The current rate of growth in the resources sector means that there is a necessity to bring in skilled workers from overseas. The Federal Government is currently developing the terms of a new arrangement - Employment Migration Agreements - which companies could enter into on major projects.

Unions are not opposed to all use of foreign workers, but we argue they must be paid at local rates and only used when local workers aren't available.

If Gina Rinehart had her way, mining companies 'in the zone' would be given carte blanche to import cut-rate foreign workforces in the construction phase of their projects - the phase that delivers 90 per cent of jobs.

So if we don't get Australian jobs, if we don't collect any tax, if we don't put anything away for the future, if the profits from Australian resources are simply lining the pockets of mining magnates and foreign shareholders - what are we left with?

A buggered economy and some holes in the ground. That's the real headline.

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Tony Maher is the National President of the CFMEU Mining and Energy Division. He has been an official of the Union for over 20 years.