Australia's Energy Resources (ERA) Suspends Uranium Processing " 12 Week Stoppage "

Published on Friday January 28 2011

SYDNEY Jan 28 (Reuters) - Energy Resources Australia has suspended uranium processing at its Ranger mine in Australia's Northern Territoy as a precautionary measure during the region's annual wet season, the company said.

The 68 percent-owned subsidiary of Rio Tinto said the suspension was likely to last 12 weeks.

"The La Niña weather pattern, which has brought extensive flooding to the eastern states of Australia, has also brought significantly higher than average rainfall to Ranger mine since October 2010," the company said.

As a consequence of the suspension, ERA said it sees 2011 production of uranium oxide at this stage to be at a similar reduced level to 2010, when it produced 3,793 tonnes. 

 Readers Please Note!

I would like to also take special note that this may very well put upward pressure on the current Uranium Spot Market

During 2010, Energy Resources Ranger Mine currently supplied  approximately 8.8% of World supplies and is rated as the worlds Second largest Uranium producing Mine behind Cameco's McArthur River.

Australia's Energy Resources Cuts Uranium Output Target, Will Buy Spot

Published on Tuesday Oct 13 2010

Energy Resources of Australia (ERA.ASX) cut its full-year uranium oxide output target by up to 800 tonnes after third-quarter output dropped 35 percent and said it will need to buy material to meet sales obligations.

* ERA blames less rich ores for the drop

* Says 2010 output target cut by up to 800 tonnes

* Braces for adverse impact on 2010 earnings

The news, which sent ERA shares down more than 6 percent, is expected to exacerbate an already-tight world market for uranium oxide, used in nuclear power generation.

"The shortfall represents about 1 percent of world supply in 2010, so it's not the end of the world, but could have some impact on the uranium price," Warwick Grigor, a sector analyst and chairman of BGF Equities in Sydney.

"Overall, ERA is coming in 20 percent under their capacity, and that's significant," Grigor said.

ERA, which in 2009 accounted for nearly 10 percent of world uranium oxide output, downgraded its full-year output target to 3,900 tonnes, from between 4,300 and 4,700 tonnes.

It also said it would have to go to the market to meet 2010 sales commitments of around 5,000 tonnes.

By 0455 GMT shares in ERA, which is 68 percent owned by Rio Tinto , were down 6.4 percent at A$13.53.

TIGHT URANIUM MARKET

The limited growth in mined supply is a legacy of the 1990s, when plunging prices froze most exploration and development.

After falling as far as $7 a pound on spot markets in 2000, prices rebounded to $136 in 2007 -- spot uranium UX-U3O8-SPT is now at $48 -- as countries searching for an alternative to greenhouse gas-producing power sources such as coal have re-embraced nuclear power.

The Australian Bureau of Agricultural and Resource Economics forecasts global uranium production in 2010 will rise 5 percent to 60,190 tonnes, mainly because of higher output from Kazakhstan and parts of Africa.

ERA said its outside purchases were expected "to adversely impact 2010 earnings as the small price margin associated with the sale of the purchased material is more than offset by the ongoing costs of operation."

Its third quarter output of 911 tonnes was 10 percent higher than the previous quarter due to mining of richer ores, though the uranium grading still remains significantly below 2009 levels, the company said. (

Visit my other site Australian Uranium Investing

URANIUM OUTLOOK REMAINS STRONG

Energy Resources of Australia Ltd (ERA) says the long-term outlook for the uranium market remains strong.

"Despite price weakening in 2009, the long-term outlook for the uranium market remains strong, with nuclear power recognised as a key element of the global energy solution," chairman David Klingner told the company's annual general meeting.

"While market prices have stabilised well below the historic highs reached in 2007, current prices are still significantly higher than for most of ERAs 30-year history, supporting investments to increase output," Dr Klingner said in a statement lodged with the stock exchange on Wednesday.

ERA reiterated that full year production and sales for 2010 were expected to be broadly in line with the levels of recent years.

Production and sales will be more heavily weighted towards the second half of the year.

Dr Klingner said the lower production, and consequent sales profile, during the first half is largely a consequence of mine sequencing and anticipated lower grades.

"We will continue to see higher expenditure on scheduled maintenance programmes, along with expenditure on ERAs significant development projects, during 2010.

"We expect that all of these factors will negatively impact earnings in the first half and for the full year."

Assuming that market prices remain slightly softer than during 2009, ERA expects the average realised sales price for the first half of 2010 and the full year to be broadly in line with 2009.