$1 billion a year – The incredible pile of cash Gina Rinehart’s children say they are entitled to

Mining magnate Gina Rinehart signed an agreement with her adult children in 2006 that allowed her to extend the vesting date of the family’s multi-billion-dollar trust in exchange for her children receiving a 50% return of the family’s net cash from its main iron ore mine in Western Australia.

The benefit from the mine could soon be worth more than $1 billion a year.

Under the Hope Downs deed signed by Rinehart’s four children, Rinehart was granted the right to extend the vesting date of the Hope Margaret Hancock trust and in return her children were promised 25% of the Hope Downs net cash flow after tax, and a further 25% less any amounts for developing the tenements.

Estimates suggest Hope Down currently throws off around $1.3 billion a year in cash for Rinehart’s company, Hancock Prospecting.

But with the mine set to be upgraded and production increased, Hancock Prospecting’s share of the mine will rise from 15 million tonnes to 22.5 million tonnes.

Assuming commodity prices remain strong and costs remain contained, the amount of cash Hancock Prospecting gets from Hope Down could rise to around $2 billion.

Under those assumptions, Gina’s four children (three of whom – John Hancock, Hope Welker and Bianca Rinehart – are suing her) would be entitled to up to $1 billion a year, or more than $250 million a year for each child. 

With the mine currently undergoing massive development, it is possible that the children’s take would be reduced, but this could still amount to as much as $125 million a year if current iron ore prices and industry conditions continue.

The revelations are included in the hundreds of pages of court documents released this week, after 58-year-old Rinehart failed in her bid to shield the family stoush from media scrutiny.

It’s been revealed that before the legal action was launched, Rinehart wrote to her children telling them they should not seek to “query or challenge in court proceedings or otherwise any act or omission of Mrs Rinehart in relation to the trust” and warning them of a significant capital gains tax bill, and bankruptcy, if the trust was wound up and distributed.

Rinehart’s father Lang Hancock set up the trust for his grandchildren. It owns just under a quarter of Hancock Prospecting, the company Rinehart chairs. 

Rinehart was last week named by Forbes magazines as the world’s 29^th wealthiest billionaire, with her fortune estimated at $18 billion. In addition to iron ore and coal assets, she is an investor in media – Fairfax Media and Ten – and property.

Only Ginia Rinehart, Rinehart’s youngest child, has sided with her mother and said her siblings are motivated by greed.

Rinehart has claimed her children are “manifestly unable” to take control of the trust, but son John Hancock has pointed to their university educations and work in resources companies, including directorships at Hancock Prospecting.

“So either Australia’s university system is a sham or (Mrs Rinehart) has sham directors or Hancock Prospecting Pty Ltd – or we are more than suitable as trustees,” Hancock told The Australian.

“It’s yet another statement designed to grab headlines but it has no substance. It’s hardly worth me defending and if my mother wants to attack her own children in that manner I will let the public make up their minds on it.”

Following revelations that Nationals Senator Barnaby Joyce and Liberal MP Alby Schultz had written to Rinehart’s children urging them to drop the case, it’s been reported that Federal Treasurer Wayne Swan told Caucus he was puzzled about why the two pollies would get involved.