Fairfax: Rio Tinto's helping hand to ERA

read on SMH website

by Peter Ker

Rio Tinto's uranium division is set to help Energy Resources of Australia out of a hole, with a new agreement set to ensure that product from Rio's other mines is available to cover any shortfall in production at ERA's Ranger mine in the Northern Territory.

Today's marketing agreement comes after recent warnings from ERA that it may not be able to meet its uranium supply contracts for the second half of 2014, after a toxic leak in December forced uranium processing to be halted.

That processing halt is still in place at Ranger almost five months later, and cannot be lifted until approval is granted by Federal and Territory ministers.

Under the terms of today's sales and marketing agreement, ERA's uranium will be bought by Rio Tinto and pooled with product from Rio's Rossing mine in Namibia.

Advertisement

Rio Tinto will then use the pool of product to supply customers for both mines around the world.

''The new agreement will provide ERA's customers with multi-sourced supply,'' said ERA in a statement today.

The strategy is also designed to improve efficiencies by ensuring that customers receive uranium from whichever mine (Ranger or Rossing) that is closest.

But Rio's assistance won't come free of charge, with the diversified miner set to charge ERA a marketing fee for the service.

ERA stressed that the agreement had been scrutinised and approved by a sub-committee of independent directors.

Rio owns 68 per cent of ERA's shares - which are traded on the ASX - and the new marketing agreement further expands Rio's influence over the group.

ERA shares last traded at $1.35.