Archive for May, 2012

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Gina Rinehart made history today when she was officially tagged as the richest woman in the world by BRW after hooking two deals in iron ore and coal.

These deals, which almost tripled her wealth in the last year to $29.17 billion, according to BRW Rich 200 list, takes her a step closer to fulfilling a lifelong family dream to have the family company Hancock Prospecting build and operate an iron ore facility in the Pilbara.

The $18.87 billion increase in her wealth is equivalent to earning the average annual wage in under three minutes, or almost $600 a second.

Mind boggling ... Gina Rinehart's golden year in numbers. [These figures have been rounded up].
Mind boggling … Gina Rinehart’s golden year in numbers.
[These figures have been rounded up].

Another dream is to win two seats on the Fairfax Media board after becoming the largest single shareholder earlier this year. That dream was dealt a blow today when the Fairfax board announced a board creshuffle which didn’t include Gina Rinehart.

The news of her estimated wealth will not go unnoticed by her three estranged children John, Bianca and Hope, who have taken legal action to remove her as trustee of the family trust. Based on the BRW valuation, the children’s shares in Hancock Prospecting are now worth over $9 billion. However, they cannot sell or leverage against them due to a clause in the company constitution that says they can only be onsold to lineal descendants of their late grandfather Lang Hancock.

It also comes a day after settling a dispute with WA billionaire Stan Perron over the size of royalty payments he has been receiving from Hancock Prospecting and Wright Prospecting dating right back to 1992. The settlement came days before a trial of the case was due to commence in Western Australia’s Supreme Court. In a statement, Perron Group said the parties had agreed that Perron “is and has always been” entitled to a 15 per cent interest in the benefits and entitlements” because of that backing.

Gina Rinehart … the world’s richest woman according to BRW. Photo: Bloomberg
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The mining boom has turned BRW’s Rich List into a tailspin as traditional operators such as Westfield supremo Frank Lowy, the cardboard boxmaking Pratt family, retailer Solomon Lew, James Packer and Gerry Harvey have been usurped by mining entrepreneurs such as Andrew Forrest and Rinehart. It has also had major ramifications on the Australian economy, creating deep structural changes.

According to BRW, if the resources boom continues, Rinehart’s wealth could increase to a whoping $100 billion, which would make her the richest person in the world – a situation that is unprecedented for any Australian individual.

BRW Rich List editor Andrew Heathcote said: “The $18.87 billion increase in her wealth is unprecedented. It is the result of foreign investment in new projects, increased production and a recovery & upswing in the iron ore price over the past six months.”

The BRW valuation is far higher than the valuation of Forbes, which estimated her wealth at $US18 billion in February. Part of the discrepancy between the two estimates is due to a further increase in iron ore prices over the past several months. But in the main it demonstrates that valuations of private companies are extremely subjective and based on a number of assumptions including debt.

Rinehart’s $29.17 billion fortune catapults her to being the richest woman in the world, deposing Christy Walton ($26 billion) of the title, who is the widow of John Walton and has a major stake in US-retail giant Wal-Mart. Her wealth makes her the eighth richest person in the world, but still behind Mexican telco tycoon Carlos Slim, Bill Gates and Warren Buffett.

Rinehart debuted on the Rich List in 1992 at $75 million after inheriting Hancock Prospecting from her father Lang Hancock after he died. In 2010 BRW estimated Gina’s wealth at $4.5 billion. By 2011 it was $10.3 billion.

When she pulled off the Roy Hill deal with two South Korean companies and a Japanese company to sell 30 per cent of the iron ore tenement, providing her with $3.2 billion, it placed a price tag of $12.8 billion on a business that had previously been valued by BRW and Forbes at zero.

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Sourced & published by Henry Sapiecha

The China Inventory

China to Become the World’s Largest Importer

by 2014

We have heard a lot about China becoming the world’s largest this and that. In 2009, when the world was in recession, China leapfrogged the U.S. to become the world’s largest auto market. In 2010, China overtook Germany as the world’s largest exporter. This year, China is likely to surpass Japan to become the world’s largest luxury goods market.

So, it shouldn’t be a surprise when The Economist predicts that China will become the world’s largest importer by 2014. Yet, many skeptics still doubt China’s potential to be a stronghold of the world economy.


Last month, I was on BBC World News to discuss the eurozone debt crisis and whether Chinese consumers can make a difference in the world economy.  My discussion partner Johathon Holslag from the Brussels Institute of Contemporary China Studies argued that Chinese consumption is still far below its production, and people should not be over optimistic about China rescuing the world economy. See the discussion video below:

Yes, official statistics show that consumption is only 34 percent of China’s GDP (compared to 70 percent in the U.S.). While the West’s economy is imbalanced with over-spending, the Chinese economy is imbalanced with under-consumption. However, this dynamic is changing. When I travel in China, I can clearly see the consumption boom in China’s large and small cities. Retail has been growing like a wildfire in recent years.

While it is not China’s role to save the world economy, it is in China’s best interest to balance its own economy toward domestic consumption. In so doing, China serves as a counter-balance of over-spending Western economies.  China may not want to bail out Italy or Greece, but China can provide opportunities for these troubled economies to get their own house in order. continue »


Sourced & published by Henry Sapiecha