Rio Tinto moves to own Ranger remediation

Rio Tinto moves to own Ranger remediation, Matthew Stevens, Jul 26, 2019

https://www.afr.com/companies/mining/rio-tinto-moves-to-own-ranger-remediation-20190725-p52ape

In pushing Energy Resources Australia towards a potentially controversial capital raising Rio Tinto has moved to take greater ownership of what is arguably the most important mine retirement and clean-up in Australian resources history.

The task ahead is the required $830 million remediation of the Ranger uranium mine, which sits in a necessarily excised pocket of the United Nations World Heritage-listed Kakadu National Park.

Ranger has been operated by Energy Resources Australia through its often controversial 40-year life. Through that time ERA has been majority owned by Rio Tinto or its Australian forebear, CRA. Currently Rio owns 68.4 per cent of ERA.

But a plan to fill the $400 million or so gap between what Ranger’s remediation is expected to cost and the cash that ERA has at hand to pay for the big clean-up could quite easily see Rio creep to a position that would see the mine operator fully absorbed by the mother ship.

ERA revealed extended discussion with Rio Tinto over how the funding gap would be filled has ended with its Anglo-Australia overseer insisting the only path was for Ranger’s operator to make a renounceable rights issue.

Rio Tinto has committed to take up its full entitlement and to underwrite the balance of any issuance if alternatives are not available.

The erstwhile uranium miner told its minority owners that it is “considering the size, structure and terms” of any potential rights issue “having regard to the interests of ERA as a whole”.

While that is an appropriate expression of independence, the most unlikely outcome here would be an ERA board populated by Rio Tinto appointees will end up doing anything that does not concur with the parent’s view of the company’s future.

The minority question

The most likely question ahead, then, for minority shareholders is going to be whether or not they double-down on a failed punt and back the rights issue needed to sustain the long, costly wind-up of their business?

Whatever the size, structure and terms of the raising Rio Tinto wants ERA to make, it will be material to the minority owners. ERA’s current market capitalisation is $130 million. So tapping the market for even half the shortfall could prove definitively dilutive for those unprepared to throw funds at a business destined to disappear.

In most circumstances this course might be cause to wonder at whether or not this pathway might represent a level of minority shareholder oppression. Rio Tinto’s pitch though is the exception to the rule.

ERA stopped being a miner five years ago and hopes its future might be extended were dashed a few years later when Rio Tinto found itself unable to support the Ranger 3 underground expansion, a conclusion we revealed first in April 2015.

Presently ERA’s only recourse to income is through processing uranium from stockpiled ore. That production will end in 2021 and ERA has a legal obligation to safely close the operation by 2026. The cost of remediation will endure at least half a decade beyond that and so too will the risk to reputation and social licence of any and all shortcomings of that effort.

Quite sensibly, Rio Tinto assesses it fully owns the risk of any failure or future non-compliance. It is regularly reminded of that inescapable reality by the anti-uranium activists, by the increasingly power ESG lobby and by governments state and federal.

RELATED: Rio Tinto worried about ERA’s Ranger uranium mine

The funding proposal sketched out on Thursday announces those warnings were unnecessary. Rio Tinto really does want to own Ranger’s remediation.

July 27, 2019 Posted by Christina MacPherson | environment, Northern Territory, uranium | Leave a comment

Unfinished business: a new report on the Ranger uranium mine: what its clean-up means for Kakadu National Park

Unfinished business: Kakadu needs a new approach to cleaning up an old mine, https://www.acf.org.au/unfinished_business_kakadu_needs_a_new_approach 7 May 19,      How well the Ranger uranium mine is cleaned up is key to the long-term health of Kakadu.

A new report has found Australia’s largest national park is at long-term risk unless the clean-up of the Ranger uranium mine in Kakadu is done comprehensively and effectively.

Unfinished business, co-authored by the Sydney Environment Institute (SEI) at the University of Sydney and the Australian Conservation Foundation (ACF), identifies significant data deficiencies, a lack of clarity around regulatory and governance frameworks and uncertainty over the adequacy of current and future financing – especially in relation to future monitoring and mitigation works for the controversial mine site.

Mine operator Energy Resources of Australia (ERA) and parent company Rio Tinto are required to clean up the site to a standard suitable for inclusion in the surrounding Kakadu National Park, dual-listed on UNESCO’s World Heritage list.

“No mine in the world has ever successfully achieved this standard of clean up,” said report co-author Dr Rebecca Lawrence from SEI.

“Rehabilitating what is essentially a toxic waste dump is no easy task. Rio Tinto faces a complex and costly rehabilitation job.

“The challenge is not to simply scrape rocks into holes and plant trees, it is to make sure mine tailings, radioactive slurry and toxic by-products of mining are isolated from the surrounding environment for 10,000 years.

“To ensure this in a monsoonal environment, such as Kakadu, which is already being impacted by climate change, raises enormous environmental and governance challenges.

“For the rehabilitation process to even have a chance at success, the existing opaque and complex regulatory regime needs an urgent overhaul,” Dr Lawrence said.

Tailings, the waste material remaining after the processing of finely ground ore, are one of the serious environmental risks outlined in the report. The report examines how ERA and Rio Tinto intend to deliver on the federal government’s requirement to protect the Kakadu environment by isolating any tailings and making sure contaminants do not result in any detrimental environmental impacts for at least 10,000 years.

“Long after the miners have gone this waste remains a direct human and environmental challenge,” said report co-author Dave Sweeney from ACF.

“This issue is key to the long-term health of Kakadu but there is insufficient evidence and detail on how this work will be managed and assured in the future. Without this detail there will be a sleeping toxic time bomb deep inside Kakadu.

“At its London AGM last month Rio again committed to make sure ERA has the financial resources to deliver its rehabilitation obligations, however the financial mechanism to do so remains undisclosed.

“The community and environment of Kakadu need certainty and a comprehensive clean up.

“This work is a key test of the commitment and capacity of Northern Territory and Commonwealth regulators as well as the mining companies.”

The report makes recommendations to improve the chances of a successful clean-up at Ranger. It calls for increased transparency, public release of key project documents, a better alignment of research and operations and open review processes for key decision points.

The full report is here.

May 7, 2019 Posted by Christina MacPherson | environment, Northern Territory, uranium | Leave a comment