The Australian government has decided to block Rio Tinto-controlled Energy Resources of Australia (ASX: ERA) from mining a vast uranium deposit under Kakadu National Park in the Northern Territory. This decision effectively ends a decades-long dispute over the resource.
In March, ERA applied for a 10-year lease renewal on Jabiluka, one of the world’s largest untapped deposits of high-grade uranium. The current permit for Jabiluka is set to expire in August. However, the Northern Territory government declared special reserve status over the Jabiluka area, which surrounds Kakadu National Park, in May. This status prevents any future applications for mining in the area once the current lease expires.
Mark Monaghan, the Northern Territory mining minister, stated that the decision not to renew the lease was based on thorough consideration of all stakeholder views, including advice from the federal government and the wishes of the Mirarr people. “The federal government advice, along with the wishes of the Mirarr people, were critical to this process and outcome,” Monaghan explained in an emailed statement.
ERA expressed disappointment with the decision and is currently assessing its options. The company had hoped to extend its operations at Jabiluka, a site with significant potential due to its high-grade uranium deposits. However, the opposition from the Mirarr people and the government’s stance have posed insurmountable challenges.
The Mirarr people have long opposed mining activities in the region. They organized protests in the late 1990s and early 2000s to halt mining efforts. More recently, Rio Tinto has supported the traditional owners’ position. This support comes as part of Rio Tinto’s efforts to repair its relationship with indigenous groups after the destruction of sacred rock shelters at Juukan Gorge in Western Australia in 2020 for an iron ore mine expansion.
While activity in the Australian uranium market has increased over the past year, with developers like Boss Energy (ASX: BOE), Bannerman Energy (ASX: BMN), and Deep Yellow (ASX: DYL) seeing their value rise, ERA’s situation contrasts sharply. The company’s value has steadily declined since the Ranger uranium mine, located near Jabiluka, ceased production in 2021 after 40 years of operation.
Rehabilitation costs for the Ranger site have surged to A$2.2 billion ($1.4 billion) over the past year. ERA is expected to run out of funds by the end of the year. With no other significant assets, raising capital presents a significant challenge for the company. Shares in ERA closed down almost 6% to A$0.032, and year-to-date, the stock has lost 20% of its value, with the miner’s market capitalization sitting at A$803 million ($527 million).
