It's not personal, but Twiggy is making life hell for Gina
By Elizabeth Knight
28 June 2018 — 12:05am
As the Queen and Prince of Australia’s iron ore industry, Gina Rinehart and Andrew Forrest going head to head in a
fight over junior producer Atlas begs the question of whether the battle is personal or strategic.
Given the history of animosity between these two big personalities - one which exploded into the public arena during the mining tax saga - there is undoubtedly an element of the personal involved in this contest.
There has been a long held view that Forrest believes Rinehart was handed her empire whereas he built his from the ground up.
(To be fair to Rinehart over the past 10 years she has expanded and enhanced her company’s size and health.)
But personal rivalry is likely to run very much a second place to the strategic reasons Forrest doesn’t want Rinehart’s Hancock Prospecting getting its hands on Atlas.
And make no mistake the importance of Atlas has little to do with its iron ore assets - which are very small in the scheme of things and Atlas itself is labouring under a weight of debt that even further reduces its appeal as a corporate play.
Rather the Queen and Prince are primarily engaged in an infrastructure play - or more particularly a port play.
One of the central issues concerning the West Australian iron ore producers has long been access to infrastructure. Having been locked out of access to BHP’s rail assets Fortescue, a then-fledgling miner, had to build its own and at great cost.
There are also capacity limitations at ports and Atlas has got some access at a particular part of the Port Hedland facilities. Port Hedland contains a public berth, Utah point, which is set aside for use by small iron ore companies - one of which is Atlas.
At first blush it would appear that given neither Forrest nor Rinehart’s companies satisfy the "junior’’ criteria that getting a foot on Atlas wouldn’t be of much benefit.
But who gets what access to ports is decided by the often politicised boards of port authorities - so things can change.
But even as it currently stands, getting a reasonably-sized stake in Altas makes sense because it would allow a seat at the Atlas table and with it some leverage.
This appears to be what Fortescue was thinking when it
picked up 19.9 per cent stake a few weeks back.
Its decision to move at that time was undoubtedly motivated by the takeover offer for Atlas mounted by Mineral Resources which, had it been successful, would have locked Fortescue out of the game.
But Rinehart quickly joined the party buying a similar sized stake in Atlas and subsequently mounting a takeover.
Not only would a successful bid for Atlas by Rinehart lock Forrest out of the game but it might also provide Hancock with the opportunity to increase its iron ore production if Rinehart could wrangle some additional port space.
There have been proposals on foot to build some additional berths at South West Creek for which an Atlas consortium had been seeking approvals to develop. So the stakes are potentially higher than just Utah access.
Based on Fortescue’s current production it has enough room at Port Hedland already. Therefore, this port play may suggest it is Forrest’s insurance policy in the event his company wants to increase iron ore production down the track.
His battle to throw a hand grenade at Rinehart’s takeover offer for Atlas might equally be an attempt to limit Hancock’s ability to increase its current production, destabilise the market supply dynamics (both in terms of overall production and grades) and threaten the overall price of iron ore
.
At this point Forrest seems more likely to try everything in his arsenal to block Rinehart rather than get into a billionaires' bidding war.
The first shot fired by Fortescue was this week’s appeal to the Takeovers Panel for a finding that Hancock’s takeover documents contained "misleading statements and material omissions".
It seeks to restrain Hancock from sending its bidder’s statement to shareholders.
Fortescue might find gain some ground or at least a bit of additional time. But it is difficult to see how it can scuttle Hancock’s takeover which now has the conditional support of the Atlas board.
Fortescue can certainly remain on the Atlas register and become a burr in the blanket for Rinehart.
Indeed Forrest may become for Rinehart what Sol Lew is for Myer - the activist shareholder from hell.
disallowed/business/companies/it-s-...aking-life-hell-for-gina-20180627-p4zo2o.html
.... but then again Lew has finally started to support what is unfolding at Myer ... lol
