Australian: Ranger may have to buy in uranium

Publish Date:
9th April 2014

by Barry Fitzgerald

download PDF article

RANGER uranium miner Energy Resources of Australia faces  the prospect of having to buy in  uranium to meet supply contracts because of the prolonged  closure of the operation’s processing facilities.  Processing was stopped in  December following the collapse  of a leach tank at the site. 

The listed Rio Tinto subsidiary has completed the clean-up,  as well as an investigation into  the tank failure, and says on-  going monitoring has confirmed  there has been no impact on  Kakadu National Park, which  surrounds the operation.  But restarting the processing  plant remains dependent on government and regulatory approvals, with no timeline on when  that might happen, raising the  prospect of ERA having to secure external uranium supplies. 

There was no production  from the processing plant in the  March quarter.  ERA has said previously that  it built up a large inventory of  uranium sufficient to meet all of  its sales commitments in the first  half of this year.  A prolonged closure would  make meeting sales commitments in the second half of the  year more problematic.  The company’s options include borrowing third-party uranium, purchasing uranium on  the spot market, or altering shipping schedules with the agreement of customers.  The fall in uranium prices  since the March 2011 Fukushima  nuclear power plant meltdown  in Japan would make the cost of  finding replacement uranium on  the spot market cheaper than it  otherwise would have been. 

Spot uranium prices were last  quoted at less than $US34 a  pound, or less than half the  $US70 a pound price before the  tsunami hit Fukushima.  ERA is expected to provide an  update on restarting the processing plant at today’s annual  meeting in Darwin.  The group’s March quarter  report, released yesterday,  showed backfilling of the  exhausted open-cuts at Ranger  was the main activity in the period. Development work on the  decline to access an underground uranium resource in the  Ranger 3 Deeps continues. 

The ERA-commissioned investigation into the collapse of  the leach tank found the root  cause was a damaged rubber lining inside the tank. The damage  was caused by a failed baffle on  an agitator inside the tank.  The damage to the rubber lining allowed the acidic slurry mixture to come into contact with  the tank’s steel wall, which corroded and led to its failure.  Part of ERA’s response was an “integrity’’ review of more than  8800 individual “assets’’ within  the treatment plant.