Rio Tinto says ERA is clinging to Jabiluka uranium mine option amid rehabilitation funding stoush
A stoush between Rio Tinto and subsidiary ERA suggests the Jabiluka uranium battle could return to public view.
Uranium miner ERA is clinging to the hope its Jabiluka uranium deposit can still be developed despite unwavering opposition from traditional owners, putting the company’s independent directors on a collision course with majority owner Rio Tinto.
ERA is looking to raise up to $300m to fund its short-term requirements for the rehabilitation of its long-running Ranger uranium mine, and has previously said it faces a shortfall of up to $1bn for the rehabilitation of Ranger.
But the planned raising stalled in July after Rio refused to guarantee it would take up its 86.6 per cent share of the capital raising.
ERA has previously said the disagreement was related to the price of the share issue being considered – a 10 to 15 per cent discount on the company’s then trading price.
But Rio Tinto chief executive Kellie Parker said on Thursday the major sticking point has been the insistence of ERA’s independent board members – including chairman Peter Mansell, former Newmont Australia boss Paul Dowd and Shane Charles – on keeping the company’s Jabiluka options open, with Rio refusing to kick in money for any purposes other than rehabilitating the Ranger mine.
Jabiluka sits near ERA’s Ranger operations, and all sit within the World Heritage listed Kakadu National Park. Its development has always been opposed by the Mirarr traditional owners of the region, and opposition to Jabiluka’s construction helped galvanise the longstanding coalition between environmentalists and traditional owners, culminating in an 8 month blockade of the site in 1998.
ERA conceded in 2005, signing a care and maintenance agreement with the Mirarr people that promised Jabiluka would never be developed without the consent of traditional owners.
But that longstanding stoush has now resurfaced amid the global energy crisis, after an independent expert report prepared on behalf of ERA’s independent directors revealed the company was planning to seek an extension of its mineral lease covering Jabiluka ahead of its 2024 expiry date.
Ms Parker told The Australian that Rio was becoming increasingly frustrated with ERA’s independent board committee.
“We certainly have provided ERA ample opportunity to find the mechanism to fund rehabilitation, and suggestions of how we could help. And we just want to ensure that the Mirarr’s wishes are completely respected,” she said.
“What comes back is very different and that is just becoming more and more frustrating and, in fact, we‘re losing confidence.”
Ms Parker said that Rio wanted a commitment from ERA that any cash it chipped in to a capital raising, irrespective of the price, would not be used for work on the development of Jabiluka.
“The report says that Jabiluka could be developed within 10 years. It‘s very, very difficult to understand how that could even happen without traditional owner consent. And it’s difficult to see how the studies would even get funded when we are very clearly saying we want money to go into rehabilitation,” she said.
“How the independent board committee is governing this process going forward is just deeply frustrating. They have told the markets that they have got a massive cost overrun, they need capital, they need funds, and they are just frustratingly wasting time.”
The independent expert review commissioned by ERA’s independent board committee was prepared by Grant Thorton, and designed to value the company’s shares ahead of another tilt at raising money from the market.
But not only did the review reveal ERA was intending to seek renewal of its Jabiluka mineral leases, it also puts a valuation on the project suggesting the Mirarr people could be convinced to approve its development – or that it could be sold.
“If the Traditional Owners approve the development of the Jabiluka Mine, it will provide long-term economic benefits to the Mirarr People which could be used to help support their cultural activities and assist in passing their rich and long history to future generations and in sharing it with visitors to the area,” the report says.
The Grant Thornton report also suggested that longstanding concerns over the impact of Jabiluka on Kakadu could be mitigated using more modern mining methods.
The report drew an immediate response from traditional owners, represented by the Gundjeihmi Aboriginal Corporation, who said the development of Jabiluka would be worse than Rio’s destruction of 40,000 year heritage sites at Juukan Gorge in the Pilbara, noting that the area surrounding the deposit included the Boyweg-Almudj sacred site complex as well as the 65,000-year-old Madjedbebe archaeological site, Australia’s oldest known site of human occupation.
“I’ve been telling the world about the sacred sites for forty years and still they don’t listen. “We have said ‘no’ and ‘no means no’. I stood up with my family and with people from everywhere, all over the world, we all said no,” she said.
ERA’s negotiations with Rio and the conclusions of the Grant Thornton report – endorsed by ERA’s independent board committee – are reflected in disclosures to the market by ERA.
The company’s half-year financial report, released in August, notes the company’s “view remains that Jabiluka is a large, high quality uranium ore body of global significance”.
ERA still assigns a $90m value to its Jabiluka deposit, and said in its half-year report that it saw no reason to fully impair its value given there was still a chance it could be sold or developed – despite its earlier agreements, and the Mirarr people’s opposition to construction of a mine.
“For the June 2022 half-year, the review did not identify any indicators that the carrying amount of the Jabiluka undeveloped property may not be recovered in full, from successful development or sale,” the report said.
Gundjeihmi Aboriginal Corporation chief executive Justin O’Brien said ERA’s position over Jabiluka was damaging the relationship between the company and traditional owners, and risked undermining work on the rehabilitation of Ranger.
“This report is very disappointing. It suggests that the only issue worth considering is economic benefit. It has re-characterised our co-operation with rehabilitation activities as some kind of support for mining in general,” he said.
“To then draw the inference that the Mirarr would consider consenting to mining on the Jabiluka sacred area for economic gain is deeply offensive. You would need to have read almost nothing about the history of opposition to Jabiluka to come up with this valuation report”.
ERA did not respond to questions from the Australian over why it intended to apply for an extension of its Jabiluka tenements, or whether it planned to assign any cash to study the future development of the mine.
The company said in a statement it had “upheld both the intent and the words” of its agreement with the Mirarr people and would continue to do so.
“The views and statements made in this report are those of the independent expert.”