Bitter rivals unite to win $200 million lawsuit against Rio Tinto

May 13, 2013

In a $200 million mining lawsuit between Rio Tinto and two of Australia’s wealthiest families, Australian Supreme Court Justice David Hammerschlag ruled in favor of companies owned by billionaire’s Gina Rinehart and Angela Bennett and her brother Michael Wright, saying they were entitled to royalties from mines in the Pilbara region, Perthnow.com reported.

The Wright and Rinehart families - who have been bitter rivals in the past - sued Rio Tinto over the rights to iron ore beneath as much as 150 sq km of the Pilbara. They argued Rio owed them royalties dating back more than 20 years to an agreement struck on May 5, 1970 by Lang Hancock and Peter Wright.

Rinehart has separately been locked in a series of bitter disputes with Bennett over the years. One of the battles includes the rights to the country’s most lucrative mine, Hope Downs. The mine is in a remote area explored by their two deceased fathers, Lang Hancock and Peter Wright, who were once partners and discovered iron ore deposits across the Pilbara region of Australia in the 1950s.

The agreement against Rio Tinto is related to royalties from iron ore from the Channar Mine and the Eastern Range Mine.

Since 1970 these areas have become highly profitable mines and Hancock has been credited as having discovered the massive iron deposits.
Rio Tinto unsuccessfully argued that it was not obliged to pay the royalties to the descendants of Hancock and Wright because it did not control the land continuously - having lost control for a few years in 1974 and regaining control in 1979.

During the 10-day hearing in March, counsel for Rinehart and the Wright family, Allan Myers QC told the court that Rio Tinto’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.

Myers told the court his clients were claiming $200 million for lost royalties.

Rio Tinto had earlier agreed to the $200 million ballpark figure if found liable.

Justice Hammerschlag found that Rio subsidiary Mount Bruce Mining was “obliged to pay” the Hancock and Wright descendents “the royalty under the 1970 Agreement in respect of ore mined in Eastern Range and Channar.”

 

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