Gina Rinehart’s Roy Hill unveils $3.2bn profit as iron ore prices hits result

The mining magnate has recorded another huge result at her crown jewel, but commodity prices means the iron ore operation could not match last year’s record revenues.

Gina Rinehart has made another big profit at Roy Hill

Resources billionaire Gina Rinehart’s Roy Hill mine has delivered another major profit – though commodity prices have hit the iron ore asset’s financial result.

Net profit was a bumper $3.2bn for the year to June 30, but falling iron ore prices means the result was down 28 per cent from a record figure in 2021. It was still up 43 per cent from the 2020, when Roy Hill made a $2.2bn net profit, and is among the biggest financial results for any privately-owned Australian company.

Benchmark prices for iron ore averaged $US138 a tonne last financial year, down 10 per cent on the $US154 a tonne from the previous year.

Fortescue Metals’s profit fell 40 per cent to $US6.2bn for the year on the back of lower iron ore prices and rising cost pressure in the Pilbara. Similarly, BHP’s underlying iron ore earnings before interest and tax were down almost 20 per cent for the year.

But iron ore prices were well above long term levels and Roy Hill booked $4bn in cash flow from its operations, as the company shipped more than 60 million tonnes of iron ore to export markets for the first time since sending its first shipment overseas in late 2015.

Through Roy Hill and her Hancock Prospecting, Mrs Rinehart is one of Australia’s biggest corporate taxpayers.

Roy Hill paid $761 million in State Royalties and Native Title royalties this year, along with a further $2.1bn in income tax payments to the end of June.

The mine paid $3.3bn in dividends to its owners, Mrs Rinehart’s Hancock Prospecting, Marubeni Corporation, POSCO and China Steel Corporation,

Hancock is Roy Hill’s majority owner with a 70 per cent shareholding, and the result sets up the likelihood of Hancock posting another big financial result when its annual report is lodged with the corporate regulator.

Last year, Hancock lodged a massive $7bn profit, one of the biggest results for a private company in recent memory.

Mrs Rinehart described the Roy Hill result as “another great year” for the mine.

“When mining does well, Australia does well. Once again, the significant contribution Roy Hill and mining in general makes to the country has been highlighted – creating jobs and opportunities, powering the economy through Covid and contributing to health, defence, police, our elderly, infrastructure and more,” she said.

So well has Roy Hill performed since operations began that it paid off its entire $US7.2bn ($10.7bn) in debt within five years.

Roy Hill now has the right to export 70 million tonnes a year through Port Hedland, and the company flagged a push to lift exports again this year, saying it had commissioned an expansion to its magnetic separation plant – reducing the amount of waste ore sent to tailings and produces a high-grade iron ore product.

A total of $683m has been committed by Roy Hill for new capital, including the purchase of the Pilbara’s first battery powered locomotive, scheduled for delivery in 2023.

Roy Hill chief executive Gerhard Veldsman said the mine’s “outstanding performance” was “credit to the hard work and dedication of all teams across the business. “The integration of our planning, scheduling, and mine execution teams, along with a shift to a more strategic planning model, helped us to achieve a record in excess of 60 million tonnes of quality product shipped to our customers.”

Some $2.3bn was paid to suppliers of services, materials, and equipment to Roy Hill during the financial year, the accounts show.

Roy Hill represents Mrs Rinehart’s long-held dream of her family owning and operating its own mine, although it almost didn’t happen. Mrs Rinehart had put together a complex debt package in 2014 to help fund the development, including 19 major banks and five credit export agencies.

Before that, she had come close to pulling the pin when one of the contractors used on the mine’s preparation plant went under, delaying financing.

Mrs Rinehart even drew up closure plans for Roy Hill, before eventually pressing ahead. “It is true, Roy Hill almost never happened. We got that close. We were running out of money,” she told The Australian in 2020.

Originally published as Gina Rinehart’s Roy Hill unveils $3.2bn profit as iron ore prices hits result