Energy Resources of Australia warns if faces huge funding shortfall to clean up Ranger uranium mine
The owner of the Ranger uranium mine faces a race against time to rehabilitate the mothballed mine, which sits within the Kakadu National Park.
The cost of rehabilitating the Ranger uranium mine could blow out by as much as $1.2bn, according to former uranium miner Energy Resources of Australia, with the company racing against time to complete its work before a 2026 legal deadline.
ERA finished mining and processing at Ranger in January, and began the work of cleaning up the long-running uranium mine, which produced more than 132,000 tonnes of uranium oxide over its 40 year life.
But the company has for some time been warning its remaining shareholders it faces a blowout in the costs of rehabilitating the site, which sits within the environmentally sensitive Kakadu National Park.
On Wednesday, ERA tipped the total cost of the clean-up of Ranger at $1.6bn to $2.2bn – substantially more than the $973m it forecast in a 2019 feasibility study.
ERA has already spent at least $240m on rehabilitation work, with its last set of half-year financial accounts put remaining closure costs at about $730m.
But, with the company holding only $699m in available cash at the end of December, down from $725 at the end of June, the new costings suggest ERA is facing a shortfall of up to $1.2bn.
That could add to an expensive summer for majority shareholder Rio Tinto, which holds more than 86 per cent of ERA shares and has committed to ensuring Ranger’s clean-up costs are fully funded.
ERA last raised money in late 2019, after Rio backed a steeply discounted $476m capital raising designed to fund Ranger’s rehabilitation costs and which helped dilute minority shareholders further down the company’s register.
But ERA’s problems do not end with its cash position.
The company has warned it faces a race against time to meet a January 2026 deadline to complete the clean-up of Ranger, and may need a change to federal laws regulating the mine to complete the work.
“A key constraint for ERA is the Atomic Energy Act 1953, which currently requires completion of rehabilitation activities by January 2026. ERA has been engaging with Government and key stakeholders to amend the Atomic Energy Act 1953 and extend the expiry date of ERA’s tenure on the Ranger Project Area,” the company said.
ERA is facing major problems dredging and cleaning up the water from the tailings dumped in old mining pits, as well as emerging issues with the method it plans to use to cap old mining pits.
Like the rest of the mining sector, ERA also appears to be suffering from the industry-wide skills shortage, flagging “additional costs associated with supplementary project management and owners team support roles required to deliver the project”.
And the company warned it has not yet settled on a final cost to close down the old uranium mine, saying it is still considering further revisions to its mine closure plan.
“The board of ERA has requested management review further options for the completion of the rehabilitation project, including a proposed revision to the methodology for capping Pit 3 to more traditional methods that could be subject to lower execution risk than ERA’s current approved Mine Closure Plan,” the company said.
“Any change to the execution methodology for the rehabilitation project is likely to necessitate further revision to the forecast cost and schedule for completing the project. Nevertheless, the projected cost overruns are expected to fall within the reforecast range.”
ERA shares were up 4.7 per cent to 33.5c on the ASX late morning.
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