Rio shares dropped 34c, or 0.59 per cent, at A$57.14 on Friday. Photo / File
Rio shares dropped 34c, or 0.59 per cent, at A$57.14 on Friday. Photo / File
Mining giant Rio Tinto has pulled its support for any expansion of Kakadu's Ranger uranium mine after its operator put the project on ice.
Energy Resources of Australia has decided a new proposed underground mine at Ranger will not proceed to a final feasibility study for now, because of asluggish uranium market that has not improved in line with expectations.
The mine would need to operate beyond its authorisation, which expires in 2021, to prove economical, ERA said. ERA shares plunged as a result, dropping 62.5 cents, or 48.26 per cent, to 67c.
The company wants to speak to the federal government and the traditional owners of the land about a possible extension of the Ranger Authority, and revisit the expansion's economics over time.
But Rio Tinto, which holds a controlling 68 per cent stake in ERA, has withdrawn its support for the new underground mine.
"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," it said.
In response, ERA said it remains committed to revisiting the proposed expansion at some point, and will speak to Rio Tinto "to understand the implications of their position for this approach".
Rio said the decision not to proceed with the Ranger expansion may result in a non-cash impairment charge of about US$300 million ($429 million) on its stake in ERA.
