The battle's not over for Gina Rinehart

A COURT has granted a $1 billion iron ore windfall to the people she most despises.

WHEN Australia's richest woman, Gina Rinehart, discovered she had been stripped of her prized 25 per cent stake in the Pilbara's biggest unmined pile of iron ore, she exploded with rage in a manner reminiscent of her late father, Lang Hancock.

The West Australian Supreme Court ruling instantly wiped up to $1 billion from Rinehart's wealth -- last estimated at $3.4bn -- and will deprive her of billions in potential earnings from the Rhodes Ridge deposit, which was pegged by the swashbuckling Hancock in the 1960s.

But for Rinehart, this galling defeat is about more than money.

The judgment means she must give up her quarter share in Rhodes Ridge to two of the people she most despises -- Michael Wright and Angela Bennett, the offspring of Peter Wright, who was Hancock's long-time business partner and mate.

Both men would turn in their graves at the unedifying spectacle of their descendants squabbling over the spoils of a deal they struck in 1984 that carved up their assets, following their pioneering mineral discoveries in WA's rugged north.

"The original agreement between Hancock and Wright was a handshake deal between a couple of old mates," says Perth mining analyst Peter Strachan, of StockAnalysis.

"Now you've got these people born with silver spoons in their mouths fighting over it all."

The Supreme Court ruling, released publicly this week more than two years after the case was heard, will increase the Wrights' share of the high-grade Rhodes Ridge deposit from 25 per cent to 50 per cent, leaving Rinehart with nothing.

Wright and Bennett took Rinehart to court in 2001 claiming their fathers had agreed in 1984 -- when they were both in their mid-70s -- that Wright was to be entitled to 50 per cent of Rhodes Ridge.

The hearing was told that in 1983 Hancock simply sat down and divided up the interests he had accumulated with Wright, writing them down on two pieces of paper. On one page he listed the iron ore interests and on the other he wrote down the rest, including coal and manganese.

Hancock then told his partner to choose which set of interests he preferred and Wright chose the iron ore assets, which included Rhodes Ridge.

But Rinehart claims the 1984 agreement was superceded by other deals between the two men, and she refused to hand over her stake.

The legal brawl has ramifications for the development of the Pilbara's iron ore industry and could even spill over into other deposits.

Mining giant Rio Tinto, which owns 50 per cent of the 3 billion tonne-plus Rhodes Ridge, is privately concerned that its plans will be delayed by possible appeals against the ruling.

Rio says it wants to invest billions in a new mine at Rhodes Ridge in the next few years to take advantage of soaring demand from China, but as things stand it does not know who its joint venture partner or partners will be.

Hancock Prospecting, which is chaired by Rinehart, says it is considering an appeal against the ruling delivered by Justice Michael Murray.

Those who have watched Rinehart over the years, including through legal battles with her stepmother Rose Porteous over ownership of Hancock's fortune, say she is unlikely to back down.

They say Rinehart was irate when told of the judgment and believe the memory of her father will spur her to continue the fight.

Rinehart declined to comment on the case, but in a statement Hancock Prospecting said it was "very disappointed" with the outcome.

An appeal must be lodged within 21 days of any court orders being made. But Justice Murray left it to the warring parties to agree on a form of orders. He said a change of ownership of Rhodes Ridge would also require ministerial consent.

Waiting in the wings are Andrew "Twiggy" Forrest's Fortescue Metals and Perth junior Cazaly Resources, which has mounted a court challenge to snatch Rhodes Ridge from under the nose of Rio Tinto under WA's "use it or lose it" regime for minerals.

Cazaly says Rio Tinto, Hancock Prospecting and Wright Prospecting have failed to develop Rhodes Ridge despite signing a state agreement with the state government in 1972. Fortescue has agreed to cover Cazaly's legal costs. If it wins access to the land the brazen minnow would sell it to Fortescue and, in return, receive a steady stream of royalties.

Separately, observers have speculated that the Wright siblings' victory in the Rhodes Ridge case may embolden them to sue Rinehart for a share of the royalties from the Hope Downs iron ore mine, which Hancock Prospecting has developed with Rio Tinto.

Wright Prospecting is trying in the WA Supreme Court to win access to documents that would unveil the financial arrangements between Hancock and Rio in relation to Hope Downs, which is producing 30 million tonnes of iron ore a year in the Pilbara.

The business agreements between Lang Hancock and Peter Wright -- or at least those referred to in court -- do not appear to have considered the ownership of Hope Downs. Any challenge to Hope Downs would be potentially disastrous for Rinehart.

Hancock Prospecting's most recent financial accounts show the company received $179 million in iron ore sales revenue from Hope Downs in 2007-08. The mine only began operating in January 2008 so it could be expected to earn about $400m in revenue in a full year, based on current prices.

The accounts, lodged with the corporate regulator in January, show the group has ridden the resources boom, with net profit after tax soaring from $10.7m in 2004-05 to $162.2m in 2007-08.

Rinehart's wealth, like that of the Wright siblings, was inherited from the royalty deals negotiated by Hancock and Wright with Rio Tinto subsidiary Hamersley Iron in the 1960s. With the surge in demand for iron ore, those royalties have swelled to tens of millions of dollars a year.

The court hearing on the Rhodes Ridge dispute in 2007 was a bizarre episode that could have emanated from the script of a soap opera.

Bennett went to extraordinary lengths to shield herself from the cameras, parking in an area usually reserved for court staff and hiding her face behind a towel as she entered and left court. She told the court an operation for a brain tumour had damaged her memory, so she often said yes when she meant no.

The equally eccentric Wright refused to answer journalists' questions outside court, pretending to have laryngitis. He took his own pictures of the newspaper photographers and television cameramen filming him, and asked the judge whether he could take photos in court.

The court case also revealed tensions between Wright and Bennett themselves. Wright acknowledged in evidence that his relationship with his sister was strained and that she had criticised his business acumen.

Further proving that money cannot buy happiness, the case was followed by revelations that two of Peter Wright's grandchildren, Tim Wright and Natalie Wright, had won a seven-year legal fight for a share of the family fortune. Tim and Natalie are the children of Julian Wright, the estranged sibling of Michael and Angela. The 20-somethings sued their aunt and uncle and won an out-of-court settlement estimated at $68m.

On the Hancock side, family life is equally tumultuous. Rinehart fell out long ago with her son John, who changed his name by deed poll to John Hancock. But her daughter Bianca is involved in Hancock Prospecting and appears to be in line to take over the reins.

Perhaps Hancock and Wright would not be surprised that their heirs are embroiled in so much enmity. In a letter to Wright in 1982, which was tendered in court during the trial, Hancock wrote prophetically about the pair's own disputes that had emerged in the later years of their otherwise "amazingly successful" partnership.

He wrote: "We will both have to do our best to solve the problems right away rather than pass on the mess to the next generation -- a mess which, if not properly handled, could result in lawyers getting a large share of the pickings."