Rio Tinto Assessing Potential Noncash Impairment Of $300 Million--Update

By Ed Ballard 
 

LONDON-Rio Tinto PLC said on Thursday it could take a $300 million charge after Energy Resources of Australia Ltd., a uranium producer majority-owned by the Anglo-Australian mining giant, shelved a plan to dig a new underground mine.

ERA, which is 68% owned by Rio Tinto, decided it would not proceed with a final feasibility study for the Ranger 3 Deeps project in Australia's Northern Territory because of "the current operating environment," Rio Tinto said. It cited the need for "rehabilitation work" at the Ranger mine site, which is surrounded by a national park.

"After careful consideration, Rio Tinto has determined that it does not support any further study or the future development of Ranger 3 Deeps due to the project's economic challenges," it said in a statement.

"Rio Tinto is assessing a potential noncash impairment charge of approximately $300 million...relating to its shareholding in ERA," the company added.

ERA's production of uranium oxide took a hit in 2014 after a radioactive leak disrupted work at the Ranger operation.

Rio Tinto also said it is working towards arranging a credit facility to help ERA pay for clean-up work at the Ranger site if the subsidiary's own cash reserves don't cover it.

Write to Ed Ballard at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires