"Big men with big
ideas..."

How an inter-generational business relationship delivered a "genius iron ore play" for Rio Tinto in a recent transaction in Australia.

"Big men with big ideas are opening up a big country in a big way". That’s what a London journalist wrote admiringly in the 1960s of the development of Australia’s Pilbara iron ore mines. Today, development on a much larger scale goes on apace in Western Australia to help satisfy the soaring demand for iron ore, the bedrock of China’s rapid industrialization. Rio Tinto is currently spending US$1.6bn on expansion of its production and infrastructure capacity in the Pilbara.

And a recent transaction has delivered to Rio Tinto a half share in a new expansion that has been hailed “a genius iron ore play” and “an excellent strategic and value enhancing move”. In the process, Rio Tinto’s knack of nurturing long term business relationships – in this case across two generations – came to the fore, linking the pioneering past with the go-ahead present. One of those big men of the 1960s was Lang Hancock, the owner of two pastoral properties, Mulga Downs and Hamersley. He had turned to prospecting for minerals as a supplement to the slim pickings from wool growing and cattle rearing in the arid north west of Australia.

Hancock’s story of his discovery of the iron ore potential of the Pilbara is related by Alan Trengove in his book Adventure in iron: Hamersley’s first decade: in which Hancock recalls a November 1952 flight across the Hamersley Ranges, with his wife, in an Auster single engined aircraft. “Caught by a violent thunderstorm, he was forced lower and lower by heavy cumulus clouds which he did not dare to enter. As he was close to the source of the Turner (now Beasley) River, he decided to follow the river at little more than treetop height, knowing that [it would lead to open country].