Australian: Ranger may have to buy in uranium
9th April 2014
by Barry Fitzgerald
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.