Shares facing pressure over uranium leak
Rio Tinto's hopes of reviving its majority-owned Ranger uranium mine have been dealt another blow by the leak of toxic substances on Saturday.
Radioactive uranium particles and industrial acids leaked after an ageing tank split open.
Management at the mine insisted the toxic material had not leaked into the nearby Kakadu National Park but the incident follows another security breach at the mine in November and a history of water management problems.
Shares in the Rio Tinto subsidiary that operates the mine - Energy Resources of Australia - are traded on the ASX and may come under pressure on Monday morning as federal and Northern Territory regulators conduct investigations.
Processing of uranium has been halted on site until the clean-up and testing can be completed and, with some fearing that halt could last weeks, the market will be keen to know if ERA will need to buy uranium on the market to ensure it can meet its supply contracts.
ERA shares have traded about $1.30 over the past five to six weeks and most of the value in the stock is attached to hopes of starting a new underground uranium mine beneath the Ranger pits, which ceased mining last year after more than three decades.
The underground development is still being explored and will face a heavy load of approvals before it is allowed to proceed. One of the most important approvals will be in the hands of the local Mirarr indigenous group, who expressed concern on Sunday.
"Accident by accident, incident by incident, the trust is diminished," spokesman Justin O'Brien said.
ERA has promised it will not conduct further mining at Ranger without approval from the Mirarr and the highly prospective Jabiluka uranium deposit nearby also cannot be mined until the Mirarr give approval.
Mr O'Brien said the Mirarr retained an open mind about the prospect of further mining at Ranger but the group has always been steadfastly opposed to any development at Jabiluka, which holds strong cultural significance.
Saturday's leak and the incident in November, when a mine vehicle went beyond its permitted areas, come at an unfortunate time for ERA's relationship with the Mirarr, which had been improving after a $220 million upgrade of water purification infrastructure at the mine over the past year.
Ranger is one of the three biggest uranium producers in history, but its decline into virtual recess could not have come at a more testing time for Rio Tinto, which is cutting back spending and trying to prune underperforming assets from its global portfolio.
Rio stumped up about $250 million in 2011 to help fund a three-year exploration campaign that is testing the viability of an underground mining future at Ranger.
That decision was made under the previous leadership at Rio and it is unclear whether the current leadership, which last month announced the closure of the loss-making Gove Alumina Refinery in the Northern Territory, will continue to show such strong support for a struggling mine with so many environmental and indigenous issues.