Inside Hancock Prospecting's Arafura Stake Buy

Gina Rinehart, Australia's richest person, has seen her fortune grow even larger in the last few years, thanks to astute early investing in rare earths. In this episode, we look how the Rinehart-owned Hancock Prospecting Pty almost doubled its stake in Arafura Rare Earths Ltd. and the broader global landscape of the tussle for rare earths.

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Episode Transcript

Speaker 1 (00:02):
Which Australian has quietly become one of the biggest winners
in the rare earth spoom. Hello, I'm Rebecca Jones and
this is the Bloomberg Australia Podcast. In a news story
from Bloomberg News, reporters Angus Whitley, Amy Bainbridge and Ainsley
Thompson trace how Australia's richest person, Gina Reinhart, has come

(00:23):
to be in the center of a geopolitical supply chain struggle.
Today on the podcast, we zoom into just one of
those moves. Last week, Reinehart's company, Hancock Prospecting said it's
almost doubling its stake in the ASX listed Arafura Rare Earths.
Reporter Angus Whitley is here with me now to break

(00:44):
down that move and to look at where that places
Reinehart in the list of the world's richest. Angus, let's
start with the basics. What exactly has Reinhart done?

Speaker 2 (00:56):
Yeah, hib, let's look at what Hanko Perspective did.

Speaker 3 (00:59):
That's of course investment company, and effectively it doubled its
stake in Arrafurra Rare Earth from about eight percent up
to about fifty percent by taking more than its fair
share of a four hundred seventy five million Australian dollar
stock placement. And this investment really is the combination of
a lot of events this year and it tells us

(01:21):
quite a lot about what's been happening and what's going
to happen the next few years.

Speaker 2 (01:25):
I feel.

Speaker 1 (01:26):
Now let's talk about Ryan had herself. Now she's made
her fortune in iron Ore. Why make such a big
bit on rare earths? And she's not just investing here, right.

Speaker 2 (01:37):
She's not.

Speaker 3 (01:37):
She is of course best known from making billions out
of iron Ore the last two or three decades. That
was essentially she was synonymous with ron Ore from the
Pulber region and Western Australia, and she has wealth for
thirty billion, almost all of it from ron Ore. But
about five years ago, way before anyone has started talking

(01:58):
about rare earth, she started investing in the sector.

Speaker 2 (02:02):
And she now has a.

Speaker 3 (02:04):
Portfolio that we reckonize the world's biggest individual collection of
rare earth assets anywhere outside China, and it spans not
just Arifura rare ears in the Northern Territory, but Linus
rare Earth, which operates in Malaysia and Australia, Brazilian rare
earth which is respecting over in Brazil, and MP Materials,

(02:24):
which is probably the best known of the lot, America's
only producing rare earth mine in which the Department of
Defense or the Department of War took a stake in
in July.

Speaker 2 (02:36):
So because she was already in.

Speaker 3 (02:39):
These assets way before the world started really taking a
keen interest on it.

Speaker 2 (02:45):
When I say the world, I mean governments. This year,
she has been.

Speaker 3 (02:49):
The beneficiary of a stampede towards rare earth stocks.

Speaker 2 (02:53):
And what we found is when.

Speaker 3 (02:54):
Governments started realizing they needed more of these assets and
a steady supply of rare earth and rare earth magnets,
they kept running into Gina rhy not because she was
already invested in a lot of these assets that they
were relying on to produce for them outside China. And
that's really been the driver of a lot of her
wealth gains round about two billion dollars worth of gains

(03:18):
just from her investments and rarer surround the world this year.

Speaker 1 (03:23):
That is you know, it's as you describe, but it's
quite a global portfolio that is being built here Angus.
Can we remind listeners why rare earths are just so important.

Speaker 2 (03:35):
It's funny, isn't it. They are so important.

Speaker 3 (03:37):
But there's been a global awakening to that fact, if
you like, only this year when China started putting curbs
in it, And it was really only then that there
was a wide global recognition that it was important for
global allies, Western allies, i should say, led by the
US and Europe, that they needed to build and a

(04:00):
supply chain of rare earth and refined rare earth. They
didn't rely on China because they're China switched off the tap,
they'd really be in a bit of a pickle because
so many things rely on rare earth magnets. And I'm
talking the household goods like vacuum cleaners, smartphones, electric cars,

(04:21):
defense weaponry, high tech weaponry. So if governments are going
to have ready access to those, then they need to
have supply chain in their room because they can't rely
on China for that in propetuity.

Speaker 1 (04:35):
And do you have any stats around exactly how dominant
China is in this sector.

Speaker 3 (04:41):
It's pretty much a monopoly. It's about seventy percent of
the global production and ninety percent of the rare earth
magnets so it's the rest of the world is starting
from a very low base and it's going to take
a long time to build out these supply chains to
a stage where they're really providing, you know, a steady,

(05:02):
reliable stream of product that's going to secure those those
supply chains.

Speaker 1 (05:08):
So any disruption in China leaves us all up the
creek that it hits everyone else basically China.

Speaker 3 (05:16):
Yes, unless you have agreements with China and you're on
good terms that it's it's a perfect thing to weaponize
if you're in China's position, because it's a it's a
relatively small thing, but it has a huge impact on
economies and households and defense sectors.

Speaker 2 (05:35):
It's a great weapon to have in your back pocket.

Speaker 3 (05:37):
And in Gina Reinhardt's position, she's found she has been
a huge beneficiary of that, and the rarer assassis that
she is backing have have become really highly sought after
among governments, and we've seen them really put putting money
into those to accelerate the production timeline of the mining

(06:01):
companies that aren't yet in production, and outside China, there's
really only two that's anti materials and line.

Speaker 1 (06:07):
It's rare us and she's got stakes in both of them, right,
you know, because I think you're framing the thinking about
this and the broader context of the tussle for rare
earths around governments is quite an interesting one because also
the timing of all this is quite interesting too. There
was that big meeting in the White House between Donald

(06:28):
Trump and Anthony ALBERNIZI just in October. Is this one
of those rare stories where geopolitics, mining and markets are
all colliding.

Speaker 2 (06:38):
I think that's a pretty good way of putting at it.

Speaker 3 (06:39):
There's a lot of rhetoric that always surrounds these meetings
that the White House between leaders, but effectively it boils
down to two countries combining to accelerate a supply of
rare earths by targeting projects and funding projects for each
other's country. And one of those projects which was a
beneficiary of some of this funds was ARA for a
Rare Earth Developing. It's Nolan's project, which is in the

(07:02):
Northern Territory at one hundred and thirty kilometers north of
Alice Springs. When I spoke to the chairman, Mark said
that he said they're going to be introduction maybe sometime
in twenty thirty. So we've seen Arafura take advantage of
that commitment from the government. So it's no coincidence that
a few days after that agreement Arafurareros is raising money

(07:23):
because there's been such a stampede for the stock price.
Why wouldn't you raise money using your own stock when
the stock prices.

Speaker 2 (07:29):
Are so high.

Speaker 3 (07:31):
So it's really while the attention is on these companies,
they're making hany well, the sunshines.

Speaker 1 (07:38):
Finally, Angus, Where does this place Gina Reinhart now in
the order of billionaires? It's something that we track very
closely at Bloomberg. Does this this tussle for rare earths
globally volta much higher up the ranks. How's she going?

Speaker 2 (07:54):
She's doing pretty well.

Speaker 3 (07:55):
I mean she is Australia's richest person and this year
her wealth has gone up twenty eight percent to thirty
two billion US dollars. A large chunk of that is
because of her rare earth investment. That places her tenth
in the world amongst female billionaires. Ran about seventieth when

(08:16):
you include the males two. But I think it's interesting
looking at her position, if you look at the names
that surround her position in the world like she's ten.
At number eight is Mackenzie Scott, the technology billionaire, former
wife of Jeff Bezos, Amazon founder. But below her you've

(08:39):
got billionaires who perhaps you could say have made the
money from older industries rather than rarer some talking ultomobiles,
perhaps one of the standout inventions of the nineteenth century
rather than the twentieth century oil energy, you know, things
that were peak oil was in the era of the

(09:02):
nineteen eighty. So in one sense you can see Gina
Reinhart almost at her record levels of wealth, just a
few hundred million short of thirty two point three billion
US dollars, pushing pushing to that threshold with the aid
of twenty first century investments in rare earths. So there's
a nice kind of backdropped to that kind of ranking.

Speaker 1 (09:24):
Angus Bitley, thank you for joining me. To read more
about Gina Reinhart's fortune, Hankok prospecting, and the rare earth's industry,
check out our complete report on bloomberg dot com. This
episode was recorded on the traditional lands of the wil
Wondery and Gettigold people. It was produced by Paul Allen.
Our special things go out to Chester Dawson, Rachel Chang,

(09:46):
and Emily Cadman. I'm Rebecca Jones and I'll see you
next week.