Hancock, Rio Tinto ordered to pay Hope Downs royalties to ex-partners

Australian billionaire Gina Rinehart’s Hancock Prospecting and partner Rio Tinto (LSE, NYSE, ASX: RIO) must pay millions of dollars in past and future royalties after a court sided with the heirs of her father’s former business partners.

The West Australian Supreme Court ruled that Wright Prospecting and DFD Rhodes are entitled to a share of royalties from parts of the Pilbara operation, marking a significant turn in a 15-year legal battle. The final payout will be determined at a later trial, though Hancock estimates the claims could total about A$14 million (US$10 million) a year for Wright Prospecting and A$4 million for Rhodes.

The court also rejected competing ownership claims over the Hope Downs and East Angelas tenements, confirming they belong exclusively to Hancock Prospecting and dismissing what the company called “baseless” assertions from Wright family entities.

The ruling adds fresh financial and legal pressure to a long-running dispute over the spoils from Hope Downs, a cornerstone Pilbara operation, and underscores how decades-old prospecting deals can still shape ownership economics at world-class mines. 

1950s agreement

Rinehart’s father, Lang Hancock, and his former classmate, Peter Wright, teamed up in the 1950s to secure mineral rights in the area that later became Hope Downs.

In 1969, they struck a deal with businessman Don Rhodes that promised a small royalty from ore produced there. The lawsuit later focused on the Hancock-Wright partnership, the division of assets under agreements negotiated in the 1970s and amended before Wright’s death in 1985, and the separate royalty claim advanced by Rhodes’ descendants.

“At the heart of the issues raised by the parties to the proceedings were a number of formal agreements made decades ago between men who were friends or colleagues who for some years engaged in harmonious and cooperative arrangements to explore, discover and prospect for iron ore in the East Pilbara,” Smith said in a summary judgment.

Ownership, royalties

Hancock said the ownership issue was the central question in the case and welcomed the court’s decision as a decisive victory, noting the judge found rival claims “fail at the first hurdle” and ruled it would be unjust for Wright Prospecting to benefit without contributing to the project’s risks or development.

Wright Prospecting replied by welcoming the judgment. “These proceedings were commenced in 2010 to recover our share of royalties from the Hope Downs 1 – 3 mines, and, after many delays, we are pleased to finally receive a result in our favour,” it said in an emailed statement.

Hancock sought to spread the impact, saying Rio will share liability for any royalty payments and related interest to Wright or Rhodes. 

“Bringing Hope Downs to life required significant investment in exploration, evaluation and development, obtaining thousands of government approvals, securing major project financing and a joint venture partner,” executive director Jay Newby said.