Article by Josh Chiat courtesy of Stockhead
It’s Gina Rinehart’s world and we’re just living in it.
Buoyed by skyrocketing iron ore prices, her family business Hancock Prospecting just reported a record $7.3 billion profit after tax.
That figure is 80% higher than the $4.1 billion profit Hancock made in 2020, and came off the back of an incredible $16.6 billion in revenues, with $2.95 billion in income taxes.
It is the latest monster result turned out by one of Rinehart’s companies, kicking the summer of Gina into full swing.
Roy Hill, the 60Mtpa iron ore mine 70% owned by Hancock which makes up the bulk of its revenues, delivered a $4.4 billion profit.
All told the $5.6 billion in dividends paid out in the full year and September to Roy Hill’s owners kicked almost $4 billion into Hancock’s coffers.
That was driven by supercharged iron ore prices through the first half of 2021, which have since pulled back to normality in the wake of steel production curbs and economic jitters in China.
While prices for iron ore are largely set in China, Hancock said a substantial proportion of Roy Hill’s product continues to be shipped to markets in Japan, South Korea and Taiwan through arrangements with its investment partners, which includes Japan’s Marubeni and Korea’s POSCO.
Other iron ore profits came from Rinehart’s share of Rio Tinto’s Hope Downs JV, which produced 49.6Mt of iron ore in the 2021 financial year, and $938 million from Atlas Iron, the private iron ore junior which shipped 9.7Mt in 2021.
Having opened the new Sanjiv Ridge project in 2021, Atlas has received approvals to commence construction on the Miralga mine where first haulage is due to begin in 2022. Atlas’ 10Mtpa McPhee Creek low alumina iron ore deposit is in the feasibility phase, with Hancock aiming to leverage “low cost rail” to make it sustainable in low price cycles.
Hancock is also planning to complete a pre-feasibility study into its wholly owned Mulga Downs iron ore mine this financial year after more than 500,000m of drilling helped define a plus-1 billion tonne orebody.
Hancock increases its investment in “future metals”
It’s not just iron ore where Rinehart has been focusing her mining interests.
Despite her less than complimentary recent comments on the Federal Government’s decision to embrace a Net Zero target, Hancock has built an equity portfolio including copper, rare earths and lithium which rose in value by 60% by year’s end from an initial investment of $669 million to $1.076 billion.
Rinehart is one of the top shareholders in “Zero Carbon Lithium Project” owner Vulcan Energy (ASX:VUL).
Hancock’s Kidman and Co. cattle and beef business delivered $67 million in revenue in the 2021 financial year, for a net profit after tax of $11.5m.
Hancock Prospecting, majority owned by Australia’s richest person Rinehart, was far and away the most profitable private company in Australia in FY21 and among the most profitable in its corporate history.
Its asset wealth grew 39% over the past year from $21.05 billion to $29.17b aso of June 30, with just $286 million in borrowings.
With Roy Hill’s enormous US$7 billion debt funding comfortably paid off by Hancock and its minority owners, Hancock’s gearing ratio has dropped from 55% in 2019 to just 1% last financial year.
