Gina Rinehart-controlled Roy Hill Iron Ore has failed in a Supreme Court application to protect ownership of two mining leases in its $12 billion operation.
Gina Rinehart-controlled Roy Hill Iron Ore has failed in a Supreme Court application to protect ownership of two mining leases in its $12 billion operation.
Supreme Court of Western Australia Justice Matthew Howard rejected Roy Hill’s application to paper over bungles made by Hancock Prospecting when successfully applying for the mining leases in 2009.
In a judgment published recently, Justice Howard criticised a letter sent by Roy Hill to financier ANZ, saying it included an “incorrect statement” about his purported comments at a court hearing in February.
Justice Howard’s judgment reveals that Roy Hill staff want to protect two of its mining leases from potential challenges linked to a 2017 High Court decision requiring strict legal compliance in applications for mining leases .
Failing to comply with WA’s Mining Act, Hancock Prospecting filed neither mining proposals nor mineralisation reports when it applied for the mining leases on behalf of Roy Hill on June 30, 2009.
The judgment shows Hancock Prospecting did not send mineralisation reports and mining proposals to the Department of Mines and Petroleum until July 28, 2009, according to Justice Howard’s judgment.
Hancock Prospecting filed further mineralisation reports and operations proposals in November 2009.
The mining leases were granted in November 2010.
Roy Hill pushed ahead with the development of the project, securing more than $1 billion of debt funding from ANZ in 2013 before striking a $10 billion-plus syndicated debt arrangement in 2014.
Roy Hill last year asked the Supreme Court to rule the two mining leases could not be subject to legal attack while ANZ continued to hold mortgages.
Roy Hill accepted that the two mining leases had not been validly granted.
At hearing on February 17, Justice Howard expressed reservations about the orders being sought by Roy Hill.
The judge left it open to the mining company to adduce more evidence.
In his decision rejecting the application, Justice Howard described a letter sent by Roy Hill to ANZ on April 14 as “problematic in at least three respects”.
The April 14 letter did not mention the admitted failure to file mineralisation reports and operating proposals at the same time as the lease applications.
The letter suggested a court ruling would provide ANZ with the “comfort that the mining leases are valid which will ensure security of title at all times”
And the Roy Hill letter claimed that Justice Howard indicated in February he was “more likely to grant the declaration if he sees some evidence from ANZ that they support the application”.
Justice Howard said counsel for Roy Hill accepted at a hearing on August 4 that he had made no such statement.
“No explanation as to why the mortgagee was told that was provided," the judge said. "It is entirely unclear as to how that incorrect statement came to be made to the mortgagee."
Roy Hill’s application was seeking comfort based on a WA Court of Appeal decision handed down in April last year.
Elaborating on the 2017 High Court decision requiring strict compliance in WA mining lease application, the Court of Appeal decision provides some protection to mining operation buyers and financiers.
Justice Howard said the 2017 decision dealt with parties in the position of Roy Hill, who might be characterised as "being the author of its own misfortune".
Whereas the 2024 decision provided protection to others, such as mortgagees, the judge said.
Roy Hill's application would have precluded any challenge to the mining leases for the life of the ANZ mortgage.
Rejecting the application, Justice Howard pointed to the absence of scrutiny to the application "by way of opposition or fully developed submissions".
The width of the declaration being sought by Roy Hill and its "apparent effect against the world" also contributed to the judge's decision to reject the application.
