Reuters | April 3, 2023 |
Era has operated the Ranger mine since 1980, producing about 132,000 tonnes of uranium oxide. (Image courtesy of Energy Resources of Australia.)
Rio Tinto said on Tuesday it would buy A$319 million ($216.54 million) worth of shares in Energy Resources of Australia (ERA) to help fund rehabilitation costs related to a former uranium mine in the Northern Territory.
The world’s biggest iron ore miner has been under pressure to fund the cleanup costs of ERA’s Ranger mine site, which it operated for more than 30 years and is surrounded by the Kakadu national park rainforest.
Rehabilitation costs are estimated at A$1.6 billion to A$2.2 billion, ERA said in a statement.
ERA is hoping to raise up to A$369 million via an entitlement offer, with Packer & Co and Zentree Investments Ltd also expected to contribute to the capital raising.
Even if the offer is fully subscribed, ERA will need another A$210 million to A$756 million to fund the remaining rehabilitation cost, the company said, adding that it was likely to miss its January 2026 rehabilitation deadline.
“We are committed to ensuring the critical rehabilitation of Ranger is completed to a standard that will establish an environment similar to the adjacent Kakadu National Park,” said Rio Tinto’s chief executive for Australia, Kellie Parker.
Rio was the target of some of the biggest environmental protests across Australia in 1998, including an eight-month blockade and 500 arrests, after the local Indigenous Mirarr people opposed its planned development of the nearby Jabiluka concession.
The Australian government documented more than 200 environmental incidents at the mine between 1979 and 2003.
ERA will issue shares at a price of A$0.02 apiece under the entitlement offer, representing a 90.2% discount to the stock’s last close of A$0.205.
ERA shares declined 9.8% to A$0.185, their lowest since June 2022, while the benchmark index was marginally higher.
Rio Tinto’s voting power in ERA could increase to up to 89.1% from 86.3% now following the completion of the capital raising.
ERA will also use the proceeds to partly repay a A$100 million loan from Rio Tinto.
($1 = 1.4732 Australian dollars)
(By Harish Sridharan; Editing by Subhranshu Sahu)
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