In support of her ‘mining to dining’ strategic shift, Gina Rinehart’s Hancock Prospecting has struck a A$395 million (US$300 million) deal with UK-based fertilizer company, Sirius Minerals.
Under the terms of the agreement, Hancock will invest US$50 million in exchange for shares in the company and an additional $250 million for a five percent royalty on the first 13 million tons of fertilizer produced per year from Sirius Mineral’s planned $2.9 billion polyhalite mine planned for North Yorkshire. Polyhalite is a natural mineral containing four key plant nutrients – potassium, sulphur, magnesium, and calcium. Hancock will also have the right to buy up to 20,000 tons of fertilizer per year for use by its Australian agricultural holdings.
“This project delivers a new and natural product which is relevant to Hancock’s focus on agriculture and after years of field tests and across many crop types, demonstrated improved yields,” said Gina Rinehart.
Conditional Success
The investment, however, hinges upon Sirius ability to raise $1.1 billion to fund stage I of the polyhalite mine construction project. Total costs for the mine are being estimated at $2.9 billion, which includes the construction of an underground 37 kilometer conveyor system, material handling facilities, and port facilities. Stage one of the project will bring output to 10 million tons per year, with eventual increases to 13 million tons and then 20 million tons per year.
“I am advised that Sirius is working to progress the project and has the potential to become one of the world’s leading producers of multi-nutrient fertilizer [sic], and could have a life of 100 years,” said Rinehart, adding, “this fits with my approach of investing in strategic areas for the long term, and I hope the product is of assistance to many Australian farmers.”
Expansion on Multiple Fronts
This investment move coincides with Hancock Prospecting entering into a partnership with China’s Shanghai CRED to form the joint venture, Australian Outback Beef, through which the two have made an A$365 million (US$276.8 million) bid for Australia’s S. Kidman cattle empire.
Ms. Rinehart’s move for S. Kidman is key in her campaign to build an Australian cattle empire as her focus shifts away from mining. In July, it was announced that Hancock Prospecting acquired the Inverway and Riveren cattle stations in the Northern Territory totaling 550,000 hectares and a herd of 40,000 head of cattle from Indonesia’s Japfa Santori. Then, a week later it was announced that the group acquired Phoenix Park – a registered live cattle export yard and depot licensed for 20,000 head, that also includes a large-scale fodder growing operation.
However, it seems the joint venture may be outbid for the S. Kidman estate. Four of the country’s richest ranchers and cattlemen – Tom Brinkworth, Sterling Buntine, Malcolm Harris, and Viv Oldfield created the BBHO syndicate and are expected to make a bid of A$385 million (US$295 million) for the entire Kidman business, including Anna Creek Station – the largest cattle ranch in the world, and politically sensitive parcel near the Woomera weapons testing range.
In response, Rinehart fired back that the Australian Outback Beef bid was superior to BBHO’s due to the fact that she does not intend to split the S. Kidman holdings as BBHO does, and plans to retain the operation’s staff.
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Lynda Kiernan