Dirt Rich

The richest person in Australia is Gina Rinehart, who now has an estimated net worth of $31.06 billion (US$22.2 billion). Rinehart’s father, Lang Hancock, played a significant role in the rise of the country’s iron ore billionaires.

Although Hancock’s claim to have discovered Western Australia’s massive iron ore deposits might be contested, it’s unquestionable that his lobbying played a significant part in the government lifting its iron ore export ban in the early 1960s. Shortly after, Hancock struck a deal with Rio Tinto, securing a 2.5 percent royalty stream on every square ton that Rio exported from his tenements, which was quickly raking in over $250,000 a month for his company Hancock Prospecting.

Hancock continued to stake out new iron deposits across the Pilbara — the region where the iron ore industry is concentrated — and coal fields in Australia’s northeast, but when he died in 1992, the Rio Tinto royalty stream was still his company’s main source of profit.

Gina Rinehart, his only acknowledged child, took control of Hancock Prospecting and turned it into a company that is currently more profitable than most of Australia’s major banks. The company has developed several new mines, generally operated as joint ventures, except for the mega-mine that Hancock operates itself. Rinehart personally made over $1 billion in 2011 when she sold 85 percent of Hancock’s coal fields to an Indian conglomerate.

Just behind Rinehart on Australia’s rich list is Andrew Forrest, who has a net worth of over $27 billion. Forrest grew up on a cattle station in the Pilbara, but he didn’t stumble upon his iron ore deposits while droving cattle. He made his reputation and wealth in the ’80s as a freewheeling stockbroker and investment banker, where his skills of persuasion earned him the nickname “silver tongue.”

He spent a period in corporate exile after leading a troubled nickel processing venture that only became profitable once he’d left. Despite Forrest’s reputation as a “corporate cowboy,” a small mining company, now known as the Fortescue Metals Group, brought him in as their chairman and major shareholder in 2003, hoping that his connections could help develop their iron ore tenements.

Given Forrest’s patchy reputation in the Australian business world, he hustled in international financial markets to summon the vast capital required to get new mining projects off the ground. Exploiting the complexities of the mining title system, Fortescue also began accumulating a vast number of tenements.

By 2012, it was sitting on more than ninety-three thousand square kilometers — more than three times the combined holdings of Rio Tinto and Broken Hill Proprietary (BHP). Through extensive geological surveying, it has turned a small proportion of its holdings into several hugely profitable mines, and Fortescue has become the third largest iron ore exporter in the country. Forrest’s 36.25 percent controlling stake has earned him more than $2 million a day since Fortescue began paying dividends in 2011.

Among Australia’s mining mega-rich, Forrest and Rinehart’s nearest competitor is Clive Palmer, with a net worth of over $13 billion. After making his first millions as a property salesman, Palmer entered mining in the mid-1980s, snatching up western Australia’s iron ore tenements in a transaction that is still shrouded in mystery. Twenty years later, his company Mineralogy finally made a deal with a Chinese company to start mining the site, which is now earning him around $1 million a day in royalties.

In the late 2000s, he expanded his business empire with a nickel refinery and took over a company with extensive coal holdings in Australia’s northeast. Despite claiming to have had a road-to-Damascus moment on climate change when he met Al Gore in 2014, Palmer has been fighting hard for government approval and overseas finance to start mining his coal deposits. In case the export plan falls through, he’s also been seeking approval to build a new coal-fired power plant near the mine.

Vexatious Litigants and Fairweather Friends

Although multinationals Rio Tinto and BHP still dominate Australia’s iron ore industry, they are massive public companies with shares owned by a variety of large institutional and retail investors, so their profits are distributed more widely.

In contrast, Rinehart and Palmer own their companies outright, and Forrest has a large individual stake in Fortescue. This means far more of their companies’ profits flow to them directly. However, with smaller and less diversified companies — often reliant on massive debt to fund projects — they have often turned to aggressive litigation and cost cutting to protect their profits in volatile commodity markets.

Palmer’s biographer Sean Parnell refers to Palmer as a “glorified landlord” in the iron ore game, but the degree of “glory” in his tactics is questionable. He has fought never-ending court cases with his Chinese business partners, which he portrays as the patriotic struggle of an Aussie battler standing up to Chinese state power.

Of course, he just happens to be simultaneously protecting Mineralogy’s iron ore royalties — the main source of the company’s profit. Palmer also spent years in the courts to avoid paying the entitlements of sacked workers and the costs incurred by his business partners when his nickel refinery entered voluntary administration in 2016.

The failure of Palmer’s nickel refinery — and the eight hundred workers it left unemployed — was triggered by a drop in nickel prices, although Palmer was also accused of siphoning around $6 million from the company into his pet project: rebuilding the Titanic. Even without such lofty ambitions, volatile commodity markets make employment in the sector precarious, especially if a company is reliant on a single product like iron ore.

Despite Forrest’s promotion of his company to the “Fortescue family,” a thousand of its workers were axed when iron ore prices plunged in 2012. The cost savings reached absurd heights when the company announced that the stationery cupboards would be locked going forward and it would no longer be providing cutlery, tomato sauce, or other condiments for staff.

Fortescue’s cost cutting strategies have also extended to the royalties that mining companies pay for operating on legally recognized Indigenous land. In 2008, Yindjibarndi leaders asked Fortescue for a 2.5 percent royalty payment as compensation for Fortescue building a mine on their land.

The 2.5 percent royalty claim was made in reference to the percentage Rio Tinto paid to Hancock Prospecting, and was roughly commensurate with royalties that Fortescue has offered to other companies when seeking to mine their deposits, but Fortescue refused, offering a measly 1 percent of the $5 billion in annual revenue its mine was expected to generate. With the Yindjibarndi digging in their heels, Fortescue launched a decade-long war of attrition, including a failed attempt to revoke their legal control over the land.

Sometimes the precarity of jobs in mining has less to do with volatile commodity prices. When Rinehart took over Hancock Prospecting, her first move was to lay off any employees seen as loyal to her father’s wife. One of the company’s longest serving prospectors — who had reportedly discovered four times as many ore deposits as Hancock himself — was fired and agreed to sign away the $50,000 Hancock had left to him in his will. This was only Rinehart’s first maneuver to secure control over Hancock.

She has also fought long court battles with the company of her father’s former partner over Hancock’s royalties from Rio Tinto, and many against her children to prevent them accessing a trust fund that holds a 24 percent stake in Hancock. Perhaps most well-known among Australians is the vicious courtroom drama Rinehart fought with her father’s wife, Rose Porteous, over control of the Hancock estate. The stoush included allegations that Rose had poisoned Hancock, and that Rinehart had manipulated a mentally incapacitated Hancock to sign over the company to her, although neither of these claims was ever proven.

Undermining Democracy

During their rise into the billionaire club, Rinehart, Palmer, and Forrest have portrayed themselves as outsiders, fighting a David vs. Goliath battle against establishment interests. But successful mining companies don’t generally function as political outsiders. They rely on a complex array of state approvals and infrastructure support for viability, and with the source of their profit literally buried underground, they aren’t able to relocate capital as easily as companies in other sectors. As such, investments in political influence are standard procedure.

To get Fortescue’s first mine off the ground, Forrest employed former Western Australia premier Brian Burke, who turned to lobbying after serving two stints in jail for corruption (and working for Rinehart’s father as a consultant and political fixer). Thanks to Burke’s influence, government support for critical infrastructure was granted in record time. Burke still resents Forrest’s refusal to pay him in Fortescue shares, however, as well as the abrupt end to the collaboration after Burke was again investigated for corruption shortly after securing Fortescue’s approvals.

Similarly, Rinehart has groomed several conservative politicians and has been known to take politicians and public servants on junkets — including lavish dinners on the five-star residential cruise ship where she owns a suite. In 2011, she flew several senior Liberal and National party members on her private jet to a wedding hosted by the Indian businessman who was buying a stake in Rinehart’s coal assets. Both Rinehart and Palmer have recruited the Howard-era foreign minister Alexander Downer to sit on the boards of companies. Of course, none of this is exceptional in a country that’s known for its “revolving door” between politics and the resource sector.

Compared to Rinehart and Forrest, Palmer exercises political clout more directly. In his early career, he was a large donor and active member of his state’s conservative Liberal-National coalition. However, the coalition eventually lost its patience with Palmer’s outlandish public claims, such as suggesting the CIA was funding anti-coal activists, and his inability to keep his expectations for preferential treatment confidential.

The tensions came to a head in 2012 when the party — which was battling widespread perception of being in Palmer’s pocket — selected Rinehart’s company over his for a rail project linked to their coal deposits. Palmer regarded this as “reverse discrimination” and, shortly after, left to launch the politically influential, if electorally ineffectual, United Australia Party (UAP).

The party’s only major electoral success came in 2013, when Palmer won a lower-house seat and three UAP candidates entered the Senate — and for some time held the balance of power there. By 2017, however, the party was deregistered after two senators, and several state MPs, resigned.

Palmer relaunched the party to contest the 2019 federal election and, despite not winning any seats, was able to brag that his $83-million advertising campaign had kept Labor out of office — as indeed it had. With Australia’s next federal election due in the first half of next year, the UAP has launched another massive advertising blitz, this time attacking vaccine mandates and lockdowns.

As the party’s chairman, Palmer’s donations to the UAP dwarf those received by Australia’s major parties. His companies transferred $33 million to the UAP between 2013 and 2015 — more than five times the total amount of declared resource sector donations to the major parties in the same period, and far more than the $3 million Mineralogy donated to the major parties between 2005 and 2012. Google’s most recent Transparency Report clocks the United Australia Party’s spending at $2,987,550 since November last year. The second biggest spender on the list is the federal Australian Labor Party with $90,450.

The political strength of the Australian mining industry was perhaps best demonstrated in 2008, which was the last time the federal government meaningfully threatened its bottom line. The Labor Party’s proposal to tax mining superprofits was met by a massive industry campaign to not only scrap the program, but the prime minister himself.

In addition to a well-funded advertising and media campaign, Forrest challenged the tax as unconstitutional in the high court and appeared with Rinehart at a Perth rally to whip up a crowd. Palmer fronted the press to compare Prime Minister Kevin Rudd and his treasurer to Marx and Engels. The tax was significantly watered down but was still abolished by the conservative Coalition, who took power from Labor in 2013, with Palmer now supporting them from inside parliament.

More recently, Rinehart has donated a thirty-square-ton iron ore boulder to a Perth shopping center, which features a plaque engraved with a political polemic mangled into rhyming couplets. One stanza reads:

Develop North Australia, embrace multiculturalism and welcome short term foreign workers to our shores

To benefit from the export of our minerals and ores

The world’s poor need our resources: do not leave them to their fate

Our nation needs special economic zones and wiser government, before it is too late.

The final line refers to Rinehart’s long-standing advocacy for the northern half of Australia to be declared a low-tax, light-regulation zone, available to receive cheap guest workers. The proposal remains on the fringes politically, but it may be shifting the Overton Window toward the libertarian sunrise Rinehart hopes will break over Australia.

With the conservative Coalition facing an uphill battle to retain power in the upcoming election, the mining industry may soon be on war footing once again. Although Labor has shown no sign of reviving its superprofits tax, a close election might produce a governing coalition involving minor parties, some of whom are demanding a new “tycoon tax.”

If taxing Australia’s “superprofits” becomes a hot-button issue again, the country will get another hard reminder of the power that can be mobilized by its new mining magnates to shape the political landscape around their interests.