Gina Rinehart: The $100 billion dollar lady, or an iron-ore bubble waiting to burst?


Gina Rinehart, already Australia’s richest person, has seen her wealth double from $10 billion to $20 billion, writes The Motley Fool.

A report in The Age says last week she agreed to sell 15 per cent of the Pilbara-based Roy Hill project to South Korean steel giant Posco, valuing the stake in the project at more than $1.6 billion. This in turn pushed Ms Rinehart’s combined wealth up from $10.3 billion, as estimated last year, to nearly $20 billion, based on the increased value of her holding in the mine.

Last year Citigroup estimated her massive holding in rich iron ore and coal deposits may yet make her the richest person in the world. Again according to The Age, other reports have used profits generated by Rio Tinto (ASX: RIO) from shared assets to extend the projection further, suggesting Ms Rinehart’s wealth may eventually balloon to more than $100 billion.

Call me a boring old skeptic, but when I see someone’s wealth double in the space of literally a day, and when I see projections of wealth of $100 billion, I think bubble. I also think it’s a sign of the top of the market, particularly for iron ore. That Twiggy Forrest of Fortescue Metals Group (ASX: FMG) has also flown to near the top of the rich list only confirms this view.

It was only last week when the Australian Financial Review said BHP Billiton‘s (ASX: BHP) dream run of post-financial crisis earnings growth appears to be coming to an end, with lower commodities prices set to restrict earnings growth despite rising production.

Well done to Ms Rinehart for turning the business she inherited from her father into such mind-boggling wealth. But as for $100 billion? The laws of supply and demand will surely put paid to that pipe dream.

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