Rio’s ERA Hits 34-Year Low After Halting Uranium Mine Expansion

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Rio Tinto Group-controlled uranium producer Energy Resources of Australia Ltd. slumped 48 percent -- to the lowest in 34 years -- after shelving an expansion of its only mine.

A weak uranium price and uncertainty over future access agreements with local authorities led to a decision to cancel studies on an extension project at its Ranger mine in the Northern Territory, the Darwin-based producer said Thursday in a statement.

“The decision to halt this project will have a major impact to world production supply,” David Talbot, an analyst at Dundee Capital Markets Inc. in Toronto, said in a note. The halt is “very positive” for prices as the planned Ranger 3 Deeps expansion would’ve created the world’s third-largest uranium mine, he said.

Rio, the largest shareholder in ERA with a 68.4 percent stake, expects to take a writedown of about $300 million on its holding, the London-based miner said Thursday in a statement. It won’t support “the future development of Ranger 3 Deeps due to the project’s economic challenges,” Rio said.

ERA plans to engage with Rio to “understand the implications of their position,” it said in a statement.

Uranium prices have fallen 46 percent since March 2011, when an earthquake and tsunami led to a meltdown at Tokyo Electric Power Co.’s Fukushima Dai-Ichi nuclear power plant. All of Japan’s nuclear reactors have since been shuttered.

Energy Resources closed at 62.5 cents in Sydney, the lowest since Jan. 30, 1981. It earlier fell as much as 52 percent. The company was listed on Nov. 19, 1980, according to the Australian Securities Exchange.

Paladin Energy Ltd., with uranium mines in Namibia and Malawi, rose as much as 11 percent, the most since Dec. 22.

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