Gina Rinehart’s dividend payday as Roy Hill hauls profits

Earnings are falling at the big WA iron ore mine, but it still pays huge profits, giving the mining magnate plenty of spending power on recent lithium investments.

Billionaire Gina Rinehart has got a big payday from the Roy Hill mine.

Mining magnate Gina Rinehart’s Roy Hill mine has delivered one of the biggest profits for a private Australian company – and given the billionaire some more spending power in her pursuit of lithium investments.

Roy Hill, majority owned by Mrs Rinehart’s Hancock Prospecting, unveiled a $2.7bn net profit for the 2023 financial year, and has paid more than $3bn in dividends to its shareholders.

The results, lodged with the corporate regulator on Friday, come as Hancock pursues a seat at the table in the takeover bid of ASX-listed lithium miner Azure Minerals by industry heavyweight SQM.

Hancock this week was buying shares in Azure, just weeks after Mrs Rinehart raided the register of lithium producer Liontown Resources, buying a 19.9 per cent interest at up to $3 per share – the price offered by its suitor Albemarle.

Albemarle, as a result, abandoned its plan to buy Liontown, scared off by the prospect of dealing with Mrs Rinehart, who would be the kingmaker for the transaction.

Hancock is sitting on $20bn of cash on its balance sheet, boosted by its majority investment in Roy Hill, which paid $2.25bn in dividends to its owners in respect of the 2023 financial year and another $800m dividend paid just this month.

Roy Hill shipped a record 63.3 million tonnes of iron ore for the year, but falling commodity prices and rising costs have cut into Roy profits in the past two years, though the mine still makes consistently huge surpluses, pays large amounts of tax as well as the bumper dividends.

This year’s $2.7bn net profit is down from $3.2bn in 2022 and the huge $4.4bn result in 2021.

Similarly, this year’s $2.25bn dividend compares with the $4.1bn Roy Hill paid to its owners, Hancock, Marubeni Corporation, POSCO and China Steel Corporation, for the 2021 financial year and another $3.3bn in dividends to its owners in 2022.

Hancock is Roy Hill’s majority owner with a 70 per cent shareholding.

Roy Hill paid $605m in state and native title royalties, along with a further $1.4bn in corporate tax payments to the end of June this year.

Management also claimed the mine directly injected more than $1.6bn into the West Australian economy and a further $1.26bn into the rest of Australia’s economy through its contracts for goods and services

Roy Hill’s owners committed $808m in new capital during 2023, including an expansion of its Autonomous Haulage System, and are spending $106m over the next two years to upgrade accommodation and facilities at its mine village.

Mrs Rinehart said she was concerned that future mining investment will become more difficult due to current government policies and excessive government tape.

“We are currently battling onerous, time- and money-consuming regulation with overlapping approval processes and other damaging policies, all of which put a brake on investment and business development, and choke business with government tape.

“If we want our standards of living to continue, along with the many thousands of high-paying jobs created by mining, and significant benefits to the regions, states and country more broadly, we must have policies which encourage investment and development of Australia’s mineral resources.”

Roy Hill chief executive Gerhard Veldsman said this year’s financial results came in a year that “has not been without its challenges including ramping back up production after Cyclone Ilsa, along with managing some challenging market conditions, and concerning government policy. For example, the Federal Government’s proposed new [industrial relations] laws.”

Originally published as Gina Rinehart’s dividend payday as Roy Hill hauls profits