Rio Tinto needing an exit strategy to get out of hgh risk low return Ranger uranium mine

The ERA of uranium mining is over Sweeney 9 April 14, In the early hours of Saturday December 7th 2013 the evacuation order was given in the processing area of Energy Resources of Australia’s troubled Ranger uranium mine in Kakadu.

Minutes later came the unforgiving sound of peeling metal followed by a surge of over one million litres of highly acidic uranium slurry from the buckled and broken number one leach tank. The toxic tide swept over the concrete bunds meant to contain any spills and moved uncontrolled through the night and the site.

Four months later and ERA remains under pressure, under performing and under scrutiny. Mineral processing remains suspended at Ranger pending the findings of a federal government review of the tank collapse and this week the ERA board and management will face sceptical shareholders and no doubt plenty of critical questions at the company’s annual meeting in Darwin.

More by good luck than good management no one was seriously injured in the tank collapse or subsequent recovery work, but the considerable damage bill is still being counted and gaping holes have been exposed in ERA’s credibility and infrastructure.

The Kakadu environment is a living landscape – dynamic, peopled and inter-connected. The Ranger uranium mine sits close to the Magela Creek – one of the principal feeders of Kakadu’s World Heritage listed wetlands – and the source of water for the Mirarr community of Mudginberri only seven kilometres downstream.

As details and images of the tank collapse spread the Traditional Owners spoke of feeling fearful and unsafe with the Gundjeihmi Aboriginal Corporation scathingly describing Ranger as ‘nothing but a hillbilly operation, run by a hillbilly miner with hillbilly regulators’.

Only hours after the complete collapse of the tank ERA – owned by the UK based mining giant Rio Tinto – released a statement high on bravado but low on evidence claiming all contaminants had been contained and that ‘there is no impact to the environment’. This predictable and premature assurance highlighted ERA’s desire to at least retain control over its perception, if not its pollution.

A subsequent site review commissioned by ERA recently confirmed the long held concerns of many stakeholders that the aging plant is at full stretch and raised serious questions about the adequacy of both infrastructure and management systems at Ranger, finding that the mine had 35 other failed or at risk pieces of critical plant infrastructure or equipment with the potential for major human safety or environmental impacts in operation at the time of the tank collapse. The report recommended that processing not resume processing until these items have been repaired or retired while a further 48 critical assets were recommended to be serviced, repaired or retired within 6-12 months of any future plant restart. The question of re-start and the future of Ranger is in the balance and it is now decision time for Rio Tinto.

Mining at Ranger ceased in late 2013 and processing of the existing ore stockpiles remains suspended forcing ERA to explore purchasing uranium on the spot market to service its long term contracts. The depressed uranium commodity price makes this strategy less onerous for the company but the clock is ticking loud at Ranger.

ERA’s mining approval requires an end to mining and mineral processing in January 2021 followed by a mandated five year rehabilitation period where the company must rehabilitate the Ranger project area to enable the site to be re-incorporated into the surrounding Kakadu National Park. ERA effectively remains in stasis while losing time, cash, credibility and contaminants.

The freefall in the price of uranium since the Fukushima nuclear disaster – a continuing crisis directly fuelled by Australian uranium – has seen ERA post losses of over $A 350 million in the past two years and there have been over two hundred prior leaks, spills and incidents at the Ranger mine. There are severe and unresolved problems with the management of contaminated water and mine wastes and equipment and infrastructure is aging and failing. Metal and management fatigue is a dangerous combination, especially at a uranium mine in a monsoonal tropical environment inside a World Heritage listed national park.

Despite this radioactive reality ERA is continuing to press ahead with plans for new underground mining, the so called Ranger 3 Deeps project. Work on the plan is progressing despite the halt on mineral processing, growing concerns over the company’s lack of capacity and persistent system failures.

The 3 Deeps development work is advancing under the guise of exploration even though the infrastructure currently being built is designed to be used for mining and ERA is expected to seek formal federal approval for mining later this year. In the context of a depressed commodity price, an under-performing operation and a narrowing window for operations ERA’s continued pursuit of the 3 Deeps project makes little sense unless seen in the context of the company’s long held and continuing dream – a new uranium mine at the nearby Jabiluka deposit.

Like the undead in the late night horror movie the Jabiluka plan gets routinely revisited and the hope remains alive in the ERA boardroom. The history of uranium mining in Kakadu has been one of broken pipes and broken promises. Sustained Aboriginal, environmental and wider community opposition and resistance has seen the development of Jabiluka halted and any prospect of mining at Koongarra averted.

The chapter is closing on uranium mining in Kakadu and while this is all ERA do it is only a small part of parent company Rio Tinto’s global game – but a part on which Rio will be closely watched and long judged. ERA’s shareholders might be the ones asking the questions this week but it will be Rio Tinto who needs to answer and give effect to its corporate responsibility rhetoric by commencing a considered and comprehensive Ranger exit strategy.


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