The West Australian reported that Ms Gina Rinehart is planning to give her staff a AUD 500 million equity stake in the Roy Hill iron ore project in the Pilbara, which is set to become one of Australia's biggest and most profitable mines. The staff equity plan could catapult the billionaire's most loyal executives into the upper echelons of WA's rich.
Plans are being drawn up over how best to structure the equity offer, which would equate to a combined 5% stake of Roy Hill and be available to present and future Roy Hill staff as a way of rewarding and incentivising them.
Ms Rinehart's Hancock Prospecting, which owns Roy Hill Holdings, is thought to employ about 200 people on the project although that number will swell to about 1500 once the mine, with capacity to produce 55 million tonnes of the steel making ingredient a year, begins operating in late 2014.
POSCO's decision last week to spend KRW 1.78 trillion to increase its Roy Hill stake to 15% placed a AUD 10 billion valuation on the project. The valuation is similar to the expected development cost for the project, which comprises a mine site, 342 kilometers heavy haul railway and a two berth shipping set up at Port Hedland.
The board of another South Korean giant STX Corporation is expected to decide in coming days whether to take up a 5% Roy Hill stake.
Ms Rinehart is in talks with other parties to secure a third strategic investor willing to acquire 5% to 10% of Roy Hill. It would cut Hancock Prospecting's stake in Roy Hill to around 70% before taking into account the 5% staff offer.
The introduction of the cornerstone investors should provide much of the equity funding for Roy Hill's development, with the rest to be paid for with debt. Roy Hill Holdings' capital base of five ordinary shares was split into 65 million units two years ago to preempt the ownership reshuffle.
Ms Rinehart touched on the staff equity plan when commenting on WA's skills shortage during an address to the Commonwealth Business Forum in October 2011. She added that "5% of the Roy Hill equity, we will share with our employees to make them feel more part of the company."
(Sourced from www.thewest.com.au)
