Australia’s richest invests in lithium and faces family – 10/28/2023 – Market

Gina Rinehart spent three decades turning the troubled company she inherited from her father into a booming business empire, with iron ore as its driving force, facing climate change controversies along the way.

Now Australia’s richest person is targeting lithium, a crucial metal in electric car batteries that will be key in the race to reduce global emissions.

American company Albemarle this month withdrew from completing its $4.2 billion purchase of Australian lithium producer Liontown Resources, citing “increasing complexities” in the transaction, after the 69-year-old billionaire acquired a 19.9-year-old stake. % in Liontown.

Rinehart’s role in the failed deal marks the latest takeover battle for Australia’s “iron lady”, whose rise has been notable for ruthless negotiations, family disputes and litigation.

When he took over Hancock Prospecting in 1992 from his father Lang Hancock, the debt-laden iron ore business was worth just a fraction of its current valuation. Favored by Chinese demand for the raw material, Hancock seized the opportunity and Rinehart led the turnaround, transforming the company that moved royalties on iron ore concessions into one that owns and operates its own mines.

His empire has expanded from iron ore to cattle farms, energy assets and investments in startups ranging from rare earths to neurotechnology and medical cannabis. The group has accumulated A$20 billion (about R$64.2 billion) in net profit over the past four years, and Rinehart’s net worth has grown to US$26 billion (R$131.5 billion).

But she has also become one of Australia’s most controversial businesswomen, due to bitter family disputes, her calls for the government to cut mining bureaucracy and her support for right-wing leaders and climate change skeptics.

Rinehart is averse to publicity, rarely giving interviews or even making statements, despite her frenetic investments and her disproportionate role in Australian corporate life. However, she stood out for fighting for her interests, especially taking part in street protests in Perth in 2010 to oppose the mining tax.

Although she is one of the loudest voices in support of mining in Australia, she has taken a different approach to giants BHP and Rio Tinto, which emphasize that their industry will be crucial to the global energy transition.

In May, Rinehart called for the expansion of mines in the country, arguing that the sector was responsible for the country’s budget surplus and jobs boom, and criticized restrictions in the name of the environment.

“It’s very popular now to restrict mining in the name of the environment, even to dangerous snakes, rats and weeds,” Rinehart said at the time.

Jason Morrison, a former adviser to Rinehart, believes the billionaire has been unfairly demonized by the press and some politicians.

“She loves Australia, but she doesn’t get any credit,” Morrison said, adding that she had been “ahead of the curve” in investments that benefited its economy, including through her sponsorship of the Australian Olympic team. “You can see her impact on this country even from Mars.”

But not everything went as she expected. In 2015, the billionaire sold a stake she had acquired in Fairfax, publisher of The Sydney Morning Herald, after failing in her efforts to win board seats as well as the right to hire and fire editors.

Professional success brought unwanted media attention to a series of legal disputes with his family. Rinehart is involved in a lawsuit with her son John Hancock, who accused her of “calculated and deliberate fraud” in taking assets from the family trust to increase her personal wealth. Rinehart denies the allegations.

Another family court case involves Rinehart and his father’s widow, Rose Porteous, over his inheritance. The billionaire is also facing the family of Peter Wright, who was Lang Hancock’s business partner, in court over royalty agreements at the Hope Downs iron ore complex.

For Morrison, there is a “line of people” wanting to take a slice of Rinehart’s empire. “The company almost went bankrupt. It had to fight to get out of a hole. Gina took all the risks”, he assessed.

Mining industry executives interviewed by the Financial Times are unanimous in saying that Rinehart is not someone to face. She knows any deal “inside out”, one said, adding that she was among “Perth Royalty” of highly connected executives in Australia.

His political connections extend abroad. Known as a supporter of Donald Trump, Rinehart was in the former US president’s close circle at events at his resort in Mar a Lago, Florida. She had a private meeting with Indian Prime Minister Narendra Modi, whom Rinehart highlighted for reducing bureaucracy and boosting economic growth.

What does the billionaire plan to do with lithium?

Rinehart’s exact plans for Liontown and lithium are not yet clear. Hancock Prospecting has a history of partnering on projects, often with other members of Perth’s mining elite such as Mineral Resources chief executive Chris Ellison.

It likely needs expertise in lithium processing, something Australia is struggling to develop and which Albemarle has. Liontown announced on October 19 a A$1.1 billion debt financing and equity raise to bring its crucial Kathleen Valley lithium development into production.

Rinehart is fueling a growing feeling among Australia’s major lithium groups that groups from the US, China and Chile are tapping into the value of their huge reserves and that it is past time for the country’s tycoons to take a more active role.

But one person involved in the Liontown acquisition saga is skeptical. “She has explored this nationalist theme in the past, but ultimately she acts in her own business interests.”

Julian Malnic, president of the Sydney Mining Club, said Rinehart always has a clear strategy and will be ruthless in taking advantage. “When she makes a decision…it’s final,” he said.