Rio Tinto’s subsidiary ERA ditches plans for uranium mine expansion

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Image credit: ERA Twitter page

Rio Tinto’s subsidiary, uranium miner Energy Resources of Australia (ERA) has announced that it has decided to pull the plug on the Ranger 3 Deeps expansion due to unchanging market conditions and depressed uranium prices.

Image credit: ERA Twitter page
Image credit: ERA Twitter page

According to the company’s media release, the mine only had authority to operate until 2021, which was not in line with the economics of the project.

The company also announced that it will continue to process its stockpiles and meet obligations to its customers.

“This decision has been driven primarily by two key factors. First, the Board’s view is that the uranium market has not improved as ERA previously expected and there is uncertainty regarding the uranium market’s direction in the immediate future,” reads the company’s media release.

Adertisement

“Secondly, having finalised and considered the Prefeasibility Study, the economics of the project require operations beyond the current Ranger Authority, which expires in 2021.”

The company also revealed that it would not proceed with the Final Feasibility Study of the Ranger 3 Deeps project in the current operating environment. Regarding additional funding for rehabilitation of the mine, ERA said it will approach Rio Tinto about funding support for rehabilitation.

Rio Tinto said it agreed with the decision not to progress the study.

“After careful consideration, Rio Tinto has determined that it does not support any further study or the future development of Ranger 3 Deeps due to the project’s economic challenges. Rio Tinto recognises the importance of ongoing rehabilitation work at the Ranger mine site, which is surrounded by the World Heritage-listed Kakadu National Park,” Rio said in a statement.

“Rio Tinto is 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 it can revisit the project’s economics in future, as it will continue to conserve cash until it has greater certainty for extension.

Rio Tinto is assessing a potential non-cash impairment charge of $300 million relating to its shareholding in ERA.

Mining at Ranger ceased in 2011 and the underground expansion plan was the only hope of future mining at the site. Only time will tell whether this decision will mark the end of the Ranger mine.

Energy Resources of Australia Ltd is one of the nation’s largest uranium producers and Australia’s longest continually operating uranium mine.