July 15 (Bloomberg) -- Alliance Resources Ltd. rose the most in nine months in Sydney after the mineral explorer won approval to build the Four Mile uranium mine in South Australia, projected to be among the world’s 10-biggest producers.

Alliance gained as much as 34 percent, the most since Oct. 13, to 98 Australian cents on the Australian stock exchange, and was at 86.5 cents at 3:12 p.m. local time. The benchmark ASX 200 Index was 1.5 percent higher.

Australian environment minister Peter Garrett approved the mine yesterday after two independent reviews concluded it wouldn’t have any significant impact on the environment. Uranium producers are betting demand for the metal needed for nuclear fuel will rise as countries seek cleaner-burning alternatives to coal and oil amid pressure to reduce greenhouse gas emissions.

“It’s a very good thing for the uranium industry,” said James Wilson, a resources analyst at DJ Carmichael & Co in Perth. “It is a zero carbon emissions energy, it’s probably one of the most efficient energy sources on earth.”

Adelaide-based Quasar Resources Ltd., manager of the Four Mile project, has estimated the mine will cost A$90 million ($71 million) to build and will start production in January, Alliance said March 16. Four Mile is the largest Australian uranium discovery in 25 years, Melbourne-based Alliance said on its Web site.

Four Mile will use a technique called in-situ leaching that dissolves uranium in a liquid solution that is then pumped to the surface, where the metal is recovered. The uranium will be transported 8 kilometers to the existing Beverley processing plant owned by Quasar’s parent, Heathgate Resources Pty, a unit of San Diego-based General Atomics.

Midnight Oil

Australia’s ruling Labor Party dropped its 27-year-old ban on new uranium mines in 2007, while leaving state governments with the power to reject mining proposals. Western Australia state scrapped a six-year ban on uranium mining in 2008. The country is the world’s third-largest uranium producer, according to estimates from the World Nuclear Association.

Garrett, 56, is the former lead singer of rock band Midnight Oil, whose song “Dead Heart” was an indictment of uranium mining. Garrett, who unsuccessfully ran for parliament for the Nuclear Disarmament Party in 1984, said Four Mile would be developed in line with “world best practice in uranium mining.”

His decision to approve the mine was criticized as “delusional” by Australia’s Greens party. “This acid injection uranium mine will dump radioactive waste into regional groundwater body and the minister is trying to argue this won’t damage the environment,” said Greens nuclear spokesman Senator Scott Ludlam.

The Association of Mining & Exploration Companies, which represents small and mid-sized Australian mineral exploration and mining companies, said Garrett’s ruling would help in the global effort to reduce carbon emissions.

“The fact is that uranium mining poses a relatively small risk to the Australian community and will provide fuel for low- carbon power generation in many developing countries around the world,” association Chief Executive Simon Bennison said in a statement today.

Patrick Mutz, managing director of Alliance, wasn’t immediately available for comment.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

Last Updated: July 15, 2009 01:22 EDT