(Corrects spelling of fractious in paragraph 4)
* Forrest behind company blocking prospectors from cattle station
* Traditional owners "disgusted" with actions of Fortescue chair
* Forrest says issue about complying with mining regulations
* Controversial strategy comes amid govt reforms of native title
By Jonathan Barrett
SYDNEY, May 18 (Reuters) - Mining magnate Andrew Forrest has used laws designed to protect indigenous land rights to stop prospectors searching for minerals on his West Australian cattle farms, angering both traditional Aboriginal landowners and mining community members.
While tensions between the competing interests of indigenous landholders, pastoral leaseholders and miners on government-controlled land are common, Forrest's approach represents one of the first known examples of a non-Aboriginal successfully using rights afforded to indigenous people to their own advantage.
Native title is a legal doctrine in Australia that recognises indigenous rights to certain parcels of land.
Forrest's use of it is not illegal, but it adds to the fractious relationship he has with some indigenous groups. Different groups have raised concerns over Forrest's cattle interests and have battled over land rights with the company he founded and chairs - Fortescue Metals Group, the world's fourth biggest iron ore miner.
A spokeswoman for Forrest said the issue was about complying with mining regulations.
"It is neither a matter of using native title law nor objecting to prospecting," said the spokeswoman.
She said there was support for Forrest's position within the Thalanyji people who hold native title under some of his cattle stations. The farms operated with the utmost respect for the environment, she added.
But Matthew Slack, the head of the Buurabalayji Thalanyji Aboriginal Corp which oversees native title for the indigenous landowners, said it was "pretty rich" for Forrest to use rights designed to protect indigenous interests.
Thalanyji were also concerned about cattle numbers and water use at Forrest's 2,400 square km (927 sq mile) Minderoo pastoral lease in Western Australia's Pilbara district, he said.
"We are disgusted with Forrest and have been for some time. Slack said. "Our dreamtime creatures can't survive because the river is so low."
On May 31, 2016, two small prospectors lodged applications to search for minerals on Uaroo Station, where Forrest holds a similarly sized pastoral lease, after physically marking out the territory with pegs.
Slack said Thalanyji had given the prospectors permission to be on that land.
But before the government approved the prospecting licences, a company called Red Sky Stations lodged an objection in the state's Warden's Court, where mining-related disputes are held.
Red Sky is one of several companies that represent Forrest's pastoral interests, a Reuters review of court and company documents found.
Red Sky successfully argued the prospectors had not sought a specific permit from Thalanyji required to mark out the land and their applications were rejected in a February decision.
The ruling caught Thalanyji by surprise.
"If we'd been more aware, we would've had input into the proceedings," Slack said.
Attempts to contact the two prospectors were unsuccessful.
While the prospectors could re-start the process, the licence process has been frustrated and delayed.
The move comes shortly after a separate analysis by Reuters found Forrest had covered large sections of his cattle stations with mining and exploration applications by his own companies.
Forrest said his applications were for bone fide exploration and mining, denying suggestions it was a tactic to block rivals gaining access.
Forrest was one of Australia's most prolific mining prospectors in the 2000s when he founded and built Fortescue, pressuring rivals to release land they weren't actively exploring in the Pilbara, the world's biggest iron ore precinct.
He battled the Yindjibarndi people in court over the location of an iron ore mine and the size of royalty payments when developing Fortescue's operations on their native title land.
"The impact on the community has gone from bad to worse," said Yindjibarndi elder Michael Woodley, who blames Forrest for helping divide Yindjibarndi.
"We are no longer a united front and that affects everything we do as a community."
Along with his $3.9 billion mining fortune, Forrest is well known for leading a nation-wide programme promoting indigenous employment. He is also advocating for controversial and wide-ranging welfare reforms that would have a significant impact on indigenous recipients.
Forrest has the backing of some indigenous groups, including some Yindjibarndi members, for those initiatives.
In using native title protections to prevent prospecting, however, Forrest's actions have drawn criticism from fellow explorers.
Les Lowe, president of the Amalgamated Prospectors and Leaseholders Association of Western Australia, said the case wouldn't help organisations like his work with native title groups.
"It's very odd for a pastoral station to get involved in something like this," said Lowe. "Native title laws are a powder keg issue. We believe miners are actually very hard done by so this won't help."
Any further controversy could impact government efforts to change native title laws and clear obstacles to mine development.
Parliament last week blocked the legislative changes, which would affect projects including Adani Group's proposed $16 billion Carmichael mine in Queensland. A parliamentary vote on the issue is now not expected until at least June, due in part to concerns indigenous groups have not been properly consulted.
(Editing by Lincoln Feast)