By Peter Milne
Record iron ore prices gifted the heirs of Lang Hancock’s business partner Peter Wright $436 million in royalties last financial year, 44 per cent higher than the previous year, according to the annual report of Wright Prospecting.
The wealth flowed from a 58-year-old deal the two friends from Perth’s exclusive Hale School struck with miner Rio Tinto that secured a 2.5 per cent slice of its Pilbara iron ore exports starting in 1966.
Mining business partners Peter Wright, left, with Lang Hancock in 1967.
Wright Prospecting, owned by Mr Wright’s daughter Angela Bennett and the descendants of his son Michael Wright, paid $129 million in income tax for the 12 months to June 2021, leaving an after-tax profit of $298 million.
The shareholders received franked dividends of $274 million, $75 million more than the previous year, according to the financial statements lodged with corporate regulator ASIC.
The wealth accumulation of Wright Prospecting shareholders could accelerate if they are successful in a legal action against Lang Hancock’s daughter and Australia’s richest person, Gina Rinehart, next scheduled for court in April 2022.
Wright Prospecting and the descendants of another Pilbara mining pioneer, Don Rhodes, have for two decades battled in the courts with Mrs Rinehart’s company Hancock Prospecting over a greater stake and royalties in Lang Hancock’s first iron ore tenement.
The area contains four Rio Tinto mines, two of which produced iron ore worth $US3.4 billion ($4.6 billion) in 2017.
Wright Prospecting has spent about $4 million on legal fees in each of the past two years and that appears likely to continue to be significant in the future.
The accounts note that the company “is party to various legal claims which are ongoing and uncertain as to their timing and outcome” and court decisions in its favour “may still be subject to various legal appeals or challenges resulting in possible reversal of previous claims.”
One risk, a remnant of an earlier mining venture of Wright and Hancock, is a possible liability to asbestos disease-related claims concerning the Wittenoom asbestos mine they sold in 1948.
Peter Wright’s descendants are not the only winners from record iron ore prices that surpassed $US200 ($272) a tonne.
The WA government had a $5.8 billion operating surplus in the 2020-21 financial year, the largest state surplus in Australian history.
Andrew Forrest’s Fortescue Metals Group, which exclusively mines iron ore, made a $14 billion profit over the same period and Dr Forrest received a dividend of $2.35 billion.
The nation’s iron ore exports jumped almost 50 per cent to $149 billion.
And in the approximately two minutes it took to read this story another $1656 flowed to the fortunate owners of Wright Prospecting Pty Ltd.