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QUESTIONS FOR GINA RINEHARTANSWERS ON BEHALF OF HANCOCK PROSPECTING PTY LTD
A. The Roy Hill Project:
1. With the equity partners now in place for the project, how soon do you believe the finance will be in place?
Hancock Prospecting Pty Ltd (“HPPL”)
is working with its debt advisors towardssecuring the debt finance this year that is required to develop the Roy Hillproject. Development has already commenced with the equity funds providedby HPPL and equity participants from Asia. Roy Hill, after exploration work,evaluation studies and early stage development, is now recognised as a majorworld class tier one project, and substantial interest in participating in the debtfinancing has been expressed by all major Australian banks, many internationalbanks and various Export Credit Agencies. However conditions in Australia suchas but not limited to its high cost and future additional impositions, such as the
world’s highest carbon tax and MRRT, make the raising of such massive debt
finance more difficult.
2. Do you believe you will achieve the publicly laid down timetable for the project?
There are significant challenges for development projects in the Pilbara,including the availability of labour willing to work in the Pilbara, lack of contractor capacity, cost pressures, regulatory hurdles and other hurdles, inaddition to the cyclonic conditions in the Pilbara. Roy Hill is in the process of building a capable team of professionals to deliver the project.The equity partners were due to be in place last year, however, the litigation inthe New South Wales Supreme Court brought by one then later two more of
Mrs Rinehart’s children as plaintiffs in September 2011, delayed equity
finalisation. This in turn delayed the debt raising process and hence hasdelayed the Roy Hill project.
3. Do you still believe that you need a large number of workers from overseas under Enterprise Migration Agreements to get this project off the ground? Are the number of workers under EMA you require approximately 1,500?
People in the media often do not appreciate that many Australians do not
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want to work in the Pilbara, which is approximately 1,500km from Perth, awayfrom their families, friends, doctors, dentists, pets, restaurants and cityconveniences; especially when work in the Pilbara involves conditions thatinclude dangerous cyclones, snakes as well as heat and the lack of cityconveniences. It is a fact that over decades of experience, relatively fewpeople have ventured from Eastern Australia to the Pilbara for work.The availability of tradesmen and skilled labour for large construction projectsin remote areas like the Pilbara region of West Australia is very limited,particularly when we are faced with simultaneous competition for labour fromother large development projects in the oil and gas and mining industries inAustralia. Meanwhile the Australian unemployment rate has dropped to itslowest level for a year, and the WA unemployment rate is very low. At theselevels, the labour required to build these large projects in the Pilbara, includingRoy Hill, is simply not available either in WA or Australia.
4. There has been much media speculation that the Roy Hill project is particularly important to you as it will allow you to achieve your ambition of taking the lead in developing a major mining project as a majority owner, a vision your father had not been able to fulfil; is this speculation accurate?
HPPL has a long and proud history of involvement in the Australian iron oreindustry since the 1950s, and
more recently in Australia’s coal industry. The
group’s development of the Roy Hill project, originally obtained under the
chairmanship of Mrs Rinehart in 1993, is the latest achievement in aprogression from the securing and building of the group in the 1990s, throughthe Hope Downs transaction with Rio Tinto in 2005 after years of explorationand evaluation and completing feasibility and other development studies, plus
the partnering with India’s GVK in the group’s Queensland coal projects, after
HPPL had funded and achieved a bankable feasibility study, undertaken thefirst mining in the Galilee Basin and achieved the first export of coal from theGalilee Basin, helping to open this giant new coal basin. These milestones,pursued and achieved with a very small and hard-working executive team,
provided the equity strength needed to commit to developing the company’s
own Roy Hill project, together with our Asian partners.The CEO of POSCO recently mentioned that one of the factors that helped tobuild their
relationship with HPPL was Mrs Rinehart’s desire to fulfil her
father’s vision that HPPL would lead the development of a major iron ore
mining project as a majority owner.
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B. The Hope Downs mine:
The flagship of the Hancock group of companies is, and has always been,
Hancock Prospecting Pty Ltd (“HPPL”). HPPL was incorporated on 25
November 1955 by Langley George Hancock (“Mr Hancock”) to hold and
develop all of the Hancock family’s exploration and mining prospects, interests
and royalties; the royalties having been used over many decades to explore foriron ore, acquire tenements, pay for their rental, meet expenditurecommitments of such tenements, study the tenements, seek approvals etc.,and provide staffing for all of this.The Hope Downs tenements were originally discovered by HPPL and at alltimes have been beneficially owned by HPPL. Please refer to the
attached
letters regarding the re-
acquiring of the Hope Downs tenements. HPPL’s
dealings with government are consistent with that.The series of
ABC’s questions that follow speculate on, or are based on largely
irrelevant or superceded matters and fail to understand the fundamentals of
HPPL’s ownership of Hope Downs. They also fail to understand the hopelessly
insolvent position of HFMF and its inability to maintain or develop thetenements given its lack of money and hopelessly insolvent position.Further, the questioning fails to appreciate the funding and development of Hope Downs, and, related estoppel points and the Hope Downs Deed, of whichthe ABC has a copy, or access to it (e.g. clause 4).
1. In late 1992 you signed the state agreement with Carmen Lawrence’s
Government for the development of the Hope Downs tenements. The corporate entity named in the agreement was Hope Downs Ltd, can you confirm whether that company was held ultimately at the time by the Hancock Family Memorial Foundation or Hancock Prospecting Pty Ltd?
The Iron Ore (Hope Downs) Agreement was executed on 30 November 1992between the Honourable Carmen Mary Lawrence, Premier of the State of Western Australia, acting for and on behalf of the State, and Hope DownsLimited. The Agreement was ratified by the State via the Iron Ore (HopeDowns) Agreement Act 1992, enacted on 11 December 1992.Hope Downs Limited was incorporated on 9 September 1992 and became a
wholly owned subsidiary of Hancock Prospecting Pty Ltd (“HPPL”) on 27
November 1992, the correct owner of the tenements (please refer to letters).
2. That 1992 agreement was signed when Mr Brian Burke was working for Hancock Prospecting, did he advise you on this project?
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