Mirrar In The News

Australian: ERA cans Ranger uranium mine in Kakadu

12 Jun 2015

ERA cans Ranger uranium mine in Kakadu

The Australian
June 12, 2015 2:38PM

Barry FitzGerald
Resources Editor Melbourne

ERA mines and processes uranium ore at the Ranger mine located at Jabiru, Northern Territory. Source: News Limited

The crash in uranium prices in the wake of the 2011 Fukushima nuclear disaster in Japan has claimed the controversial Ranger mine inside the world heritage-listed Kakadu National Park in the Northern Territory as its latest victim.

Operated by the Rio Tinto-controlled Energy Resources of Australia (ERA), Ranger’s long-term future was to be secured by the development of an underground uranium resource known as Ranger 3 Deeps.

But ERA has canned the development, citing the “current operating environment”.

The decision leaves ERA to process stockpiles from the previous open-cut operation which was dogged in recent years by water handling issues and process plant spills.

Shares in ERA plummeted after the announcement. At 2:10pm the shares were down 61c, or 47 per cent, to 69c each in trading on the Australian Securities Exchange.

Rio (RIO) owns 62 per cent of the ASX-listed ERA and said last night that it would likely take a $US300 million impairment charge on the investment — an acknowledgment that in the current environment, its investment is near worthless.

Rio could also be compelled to step in to ensure that in the event that Ranger’s life is not extended beyond the current treatment of stockpiles, ERA will be able to meet its rehabilitation costs of more than $600m.

ERA has said previously that it was looking to the development of Ranger 3 Deeps to bolster its cash holdings to meet the commitments, and that it might well need to find other sources of funding for one of the biggest mine clean-ups in Australian mining history.

Despite seeming to baulk at having to help ERA at its annual meeting in April, Rio said last night that it recognised the “importance of ongoing rehabilitation work at the Ranger mine site”.

It said it was “engaged with ERA on a conditional credit facility to assist ERA to fund its rehabilitation program, should additional funding be required beyond ERA’s existing cash reserves and the future earnings from processing ore stockpiles”.

ERA said the decision not to proceed at this stage with the underground development was due to

uncertainty around the uranium market’s direction in the immediate future, and its need to secure authority to continue operations beyond 2021.

Uranium prices soared to $US137 a pound in mid-2007 on expectations that the world would take up nuclear power with gusto in the fight against global warming. But the March 2011 Fukushima disaster sent prices in to a tail spin, with uranium last quoted at $US35 a pound.

ERA was once Australia’s biggest producer of uranium. But annual production of 5000 tonnes-a-year has fallen sharply in recent years to 2000 tonnes as the operation moved to the treatment of stockpiled ore.

Mining stopped in late 2012 on open-cut reserves being depleted.