Sister act: How two little-known iron ore heiresses pulled off a $5bn coup

Two Perth sisters quietly pulled off one of the biggest deals in Australian mining industry history and pocketed $5bn. Here’s the story of how it happened.

Alexandra Burt and Leonie Baldock made an estimated $5bn on the ore deal.

Two Perth sisters crept up on the mining world, pulled off one of the biggest deals in industry history and quietly walked away with $5bn.

Leonie Baldock and Alexandra Burt wanted to stay under the radar over their role in masterminding what was in total an $8bn sale of part of an undeveloped iron ore deposit, and they did.

They are notoriously private and often underestimated, according to business associates.

How the sisters stitched up the deal is one of the remarkable aspects of Mitsui’s acquisition of a 40 per cent stake in Rhodes Ridge – the iron project that shapes as Rio Tinto’s great high-grade hope in the Pilbara.

The Australian can reveal it was the Perth-based VOC Group controlled by the sisters that did all of the heavy lifting with Mitsui.

The deal appeared to come out of the blue, but the sisters worked away at executing their plan for more than four years.

They were a good fit for Mitsui. The Japanese trading house spent more than 20 years patiently watching Rhodes Ridge and pulled the trigger on the massive deal at a time when Chinese investment in Australian mining has come to a virtual standstill.

Mitsui knows the Pilbara as well as BHP and Rio, and sees Rhodes Ridge as the last of the truly big iron ore deposits.

Insiders lifted the lid on how the sisters drove the sale of Rhodes Ridge. Everyone else, including their billionaire aunt Angela Bennett and Rio, climbed on board with the finish line in sight.

Japanese trading house Mitsui spent more than 20 years watching Rhodes Ridge.

Many aspects of the deal unveiled in February have been largely overlooked, including that the sisters pocketed $5bn while Ms Bennett’s share was $3bn because her private company AMB opted to keep a 10 per cent stake.

Mitsui paid the highest price ever for a stake in an undeveloped mining asset and there was no competitive bidding process, and at a time when Rio and BHP were in furious agreement that Chinese demand for iron ore had peaked.

It is the largest single investment in Mitsui’s history and builds on a company history in the Pilbara that dates back to the 1960s.

On a 100 per cent basis, the deal attributes a value to the undeveloped Rhodes Ridge deposit that would make it the fourth-biggest mining entity on the ASX ahead of the likes of Northern Star and South32.

The deal echoes back to a time when the sisters’ grandfather Peter Wright and his partner Lang Hancock – Gina Rinehart’s father – pioneered the Pilbara iron ore industry, and the days when Japan was Australia’s most important partner. Mitsui president and chief executive Kenichi Hori regarded Rhodes Ridge as the biggest prize left in the Pilbara.

“We set our sights on Rhodes Ridge, the last large-scale undeveloped iron ore deposit in WA and a true crown jewel of the region. We have been building a relationship with the owner families since the 2000s,” he said after locking down the deal.

“Back then, there were many obstacles, and progress in discussions was limited. But by staying committed and strengthening our ties, passing down the baton from one generation to another, we finally secured the opportunity of an exclusive negotiation (with the sisters). Now, after 20 years of efforts, we have reached an agreement to acquire an interest in this incredibly scarce asset.”

Time will tell if Rhodes Ridge proves a better long-term prospect for Rio, which owns 50 per cent, than the Simandou venture in Guinea, where it has partnered with Chinese interests. Rio was in damage control on Simandou last week when it was reported that 18 people had died building the project since June 2023.

Rio has said Rhodes Ridge contains 6.8 billion tonnes of mineral resource at an average grade of 61.6 per cent iron, including 5.3 billion tonnes at 62.2 per iron, with the potential to become one of the world’s great mines.

The mining giant is still studying the deposit but plans to start with a 40 million tonne-a-year mine with first production expected around the end of the decade.

Rio Tinto Rio says Rhodes Ridge contains 6.8 billion tonnes of mineral resource.

The project has taken on massive importance for Rio as it grapples with ageing mines and declining grades in the Pilbara.

Ms Burt and Ms Baldock did not want to run a mine or get caught up in financing their share of Rhodes Ridge. They are, however, acutely aware of their family’s legacy in iron ore and do not want to see it wasted.

Ms Burt, the younger sister, has a higher public profile through running the Voyager Estate winery near Margaret River, and roles on wine industry and tourism boards.

She has also shown an interest in politics as the co-founder and chairwoman of the board of Next25, described as an independent “think-and-do” tank that is trying to improve the quality of political leadership in Australia, among other goals.

Both women are rarely in the news apart when mentioned in the numerous high-stakes court battles that have waged between the descendants of Peter Wright and Lang Hancock.

In the case of both the Wright and Hancock descendants, the battle for billions has extended into inter-family legal conflict.

It took victory over Mrs Rinehart’s Hancock Prospecting in a marathon legal case for Wright Prospecting, owned by VOC and AMB, to establish ownership of Rhodes Ridge.

The sisters owned their 25 per cent through VOC, which was set up in the Virgin Islands by their father Michael before his death in 2012. They hired experienced company director and legal eagle Yasmin Broughton as VOC’s independent chair as their sale plans started to take shape. They also enlisted the Russell Keating-led team within Macquarie Capital as sole financial adviser.

Ms Broughton, who studied Japanese at university but is not fluent, started having regular meetings with Mitsui as soon as she came on board.

The Macquarie team had previously worked with Mitsubishi on the BMA sale of the Daunia and Blackwater coal mines to Whitehaven Coal for $4.1bn and for OZ Minerals when it was acquired by BHP for $9.6bn.

Mitsui had a good relationship with Michael Wright and had stayed in regular touch with the sisters after his death, always politely making known the interest in Rhodes Ridge.

However, a number of rivers had to be crossed before a sale to Mitsui or anyone else.

A state agreement with the WA government covering Rhodes Ridge that dated back to 1972 had to be amended for a start.

Rio and Wright Prospecting also updated their 50-year-old agreement in 2022 and celebrated by camping out under the stars at Rhodes Ridge.

The happy campers that night included three of Australia’s richest women – Ms Burt, Ms Baldock and Ms Bennett – and Ms Broughton, as well as Rio iron boss Simon Trott.

Rio Tinto iron ore chief executive Simon Trott at the Rhodes Ridge iron ore deposit in WA’s Pilbara region.

Another step in the sale involved restructuring Wright Prospecting so that VOC and AMB could each own 25 per cent of Rhodes Ridge.

VOC was running the sale process concurrently with some of the other work, doing its own research on Rhodes Ridge and setting up a data room. The task involved hiring geologists and mining experts to shed more light in the size and quality of the deposit.

In the end, the sisters, Ms Broughton and the Macquarie team did not run a global sale process for VOC’s stake.

Extensive due diligence and several rounds of negotiations – led by Ms Burt, Ms Baldock and Ms Broughton on the VOC side and by Kenichi Hori, Akio Inamura, Toru Kojima and former Rio chief executive Sam Walsh on the Mitsui side – led to the parties entering into a binding share and purchase agreement.

The deal was signed off in Kyoto five days before Christmas. VOC notified Ms Bennett’s AMB, which had pre-emptive rights to match the whopping offer.

Instead, AMB saw the sale price achieved by the sisters and wanted to join in. VOC helped put them in touch with the Mitsui team and AMB sold a 15 per cent share in Rhodes Ridge based on the same valuation.

AMB finalised its binding sale and purchase agreement with Mitsui on March 12, almost three months after VOC.

The sisters declined to speak to The Australian but Ms Broughton was able to shed light on their role and how the Mitsui deal unfolded.

“Leonie and Alex played central roles. With a high-quality independent board and advisory team in place, this project was the core strategy for the group for many years,” she said.

“They remained actively engaged throughout and nothing progressed without their considered input.”

Ms Broughton said VOC had found an ideal buyer in Mitsui.

The deal is a step up on Mitsui’s stakes in four BHP iron ore mines and in Rio’s Robe River operations in the Pilbara.

“We had two primary requirements for a buyer; they obviously had to recognise the value implicit in the asset, and we also wanted to make sure they would help bring it into production,” she said.

“Mitsui was the logical party. They have a deep history in the Pilbara and a current productive working relationship with Rio Tinto at Robe River.”

Ms Broughton confirmed the sisters had for a long time wanted to exit Rhodes Ridge at the “right time for the right price”.

“It was Leonie and Alex’s long held position that they would exit Rhodes Ridge at the right time for the right price,” she said.

“They had come to a clear position that they did not want to develop and fund a vast mining operation of this scale, and the project was progressing at such a rate that it became the ideal time to embark on a sale process.

“In 2021, Leonie and Alex appointed Macquarie and shortly after I was asked to chair VOC and oversee the process.

“From early 2021 to 2024, we worked with our other partners to modernise the Rhodes Ridge State Agreement, finalise the Rhodes Ridge Joint Venture and undertake an internal restructure of Wright Prospecting such that VOC separately held Leonie and Alex’s interests in Rhodes Ridge, facilitating their independent exit from the project.”

The biggest change to the 1972 state agreement was that Rhodes Ridge can now piggy back of all of Rio’s existing rail, port and mining infrastructure in the Pilbara.

Mitsui sees 40 million tonnes a year as a stepping stone to Rhodes Ridge producing more than a 100mtpa. On its numbers, that’s 100bn yen ($1.06bn) a year in core operating cash flow at 40mt and $250bn yen at 100mt.

The deal is also a massive step up on Mitsui’s existing stakes in four BHP iron ore mines and in Rio’s Robe River operations in the Pilbara.

Mitsui see all kinds of opportunities in cost saving and operating efficiencies with Rhodes Ridge sitting close to Robe River, and notes the southern part of the tenement contains ore with now scarce, highly sought-after low-phosphorus content.

Mr Hori has also shed light on how important Rhodes Ridge will be for Rio in battling grade problems in its cash cow iron ore business.

“Rhodes Ridge will be blended with ores from other Rio Tinto operated mines, including those in which we have equity stakes in, and will be shipped as Pilbara Blend,” he said.

“Pilbara Blend is the most traded iron ore brand globally and plays a critical role in maintaining stable operations of blast furnaces for steel manufacturers.

“Across the industry, maintaining ore quality is becoming increasingly challenging as the reserves at existing mines deplete. In WA, the rising phosphorus content in ore is a particular concern. Some ore from existing mines cannot be sold as Pilbara Blend due to its high phosphorus levels.”

Originally published as Sister act: How two little-known iron ore heiresses pulled off a $5bn coup