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Mining barons ride resources resurgence

Resurgent commodity prices have delivered rivers of cash into the coffers of companies controlled by Australia’s resources rich list.

Fortescue Metals chairman Andrew Forrest Picture: Getty Images
Fortescue Metals chairman Andrew Forrest Picture: Getty Images

Resurgent commodity prices delivered rivers of cash into the coffers of companies controlled by Australia’s resources rich list, with the country’s top mining magnates — including Andrew Forrest, Gina Rinehart and Chris Wallin — booking collective pre-tax profits of more than $11.7bn.

The companies founded by the nation’s top mining entrepreneurs paid more than $3.5bn in income taxes last financial year, averaging at about the 30 per cent corporate tax rate, putting to rest any suggestion the mining industry does not pay its way.

Mr Forrest retains his crown as the top individual beneficiary of iron ore’s strong run this year, pulling dividends of more than $1.2bn from the iron ore major he founded. Mr Forrest remains the chairman of Fortescue Metals and holds 35.4 per cent of the ­company.

Mrs Rinehart’s privately held Hancock Prospecting also reaped the benefits of an iron ore price that surged close to boom-era highs in the first half of the year, declaring its third consecutive before-tax record profit, of $3.7bn.

Hancock Prospecting’s Gina Rinehart
Hancock Prospecting’s Gina Rinehart

Hancock’s half-stake in the Rio Tinto-run Hope Downs iron ore hub in the Pilbara was the source of the bulk of those profits, and the company — 76.55 per cent-controlled by Mrs Rinehart, with the rest invested in a trust for the benefit of her four children: John Hancock, and Bianca, Hope and Ginia Rinehart — declared $483m in dividends last financial year.

But separate accounts filed with ASIC by Hancock’s 70 per cent-owned Roy Hill mine, which appears to have put its teething troubles behind it, show it will be a vast wealth generator for the family when its considerable debts are repaid, booking a $1.4bn profit for the financial year.

Those profits will go towards repaying Roy Hill’s $6.5bn in debt, with the company declaring it will bring forward $US1bn ($1.45bn) in debt repayments in the current ­financial year.

The other half of iron ore’s foundational prospecting partnership between Lang Hancock and Peter Wright is still pulling in strong cash from the royalties on the rich Pilbara discoveries packaged up by the pair, with Wright Prospecting — owned by heirs Angela Bennett, Leonie Baldock and Alexandra Burt — pulling in $236.6m in mostly royalty revenue, booking a $160.6m net profit and paying out $172m in dividends to its owners.

And while the iron ore price has dominated the headlines, Queensland’s coal barons also raked it in as the metallurgical coal price held up, with privately owned Jellinbah Group and Qcoal booking more than $1bn in pre-tax profits for the financial year.

Little-known Queensland coalmining veteran Sam Chong owns a large stake in Jellinbah, which has cashed in on strong demand for Australian coking coal from Chinese steel mills, helped by the falling dollar.

Mr Chong owns Jellinbah with global mining giant Anglo American and Japan’s Marubeni, and the group holds 70 per cent stakes in the Jellinbah Mine in Queensland’s Bowen Basin and the Lake Vermont mine at Dysart, 240km northwest of Rockhampton.

Jellinbah booked pre-tax profits of $990.9m during the year, ­according to documents filed with the corporate regulator, and paid out $600m in dividends in the ­financial year, declaring another $360m shareholder payout on the back of its $696.4m net profit.

Chris Wallin’s QCoal, which operates the Sonoma, Cows, Jax and Drake metallurgical and thermal coal mines in the Bowen Basin, booked a $120.8m net profit on $419.8m in coal revenue.

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Original URL: https://www.theaustralian.com.au/business/mining-energy/mining-barons-ride-resources-resurgence/news-story/aace9ee29f47ac96185c1dbaa5bf9255