Friday, 25 May, 2007

by Barry Fitzgerald
The Age

RIO TINTO'S uranium subsidiary, Energy Resources of Australia, has continued to suffer as a result of its London-based parent upsetting traditional owners of the group's Jabiluka uranium deposit in the Northern Territory.

ERA shares dived $1.65, or 6.9 per cent, to $22.15 as investors reassessed their valuations of ERA in response to the Mirarr people saying on Wednesday their development approval for the $50 billion deposit was "not forthcoming".

ERA is now down by $2.91 a share, or 11.6 per cent, since Rio's energy chief executive, Preston Chiaro, upset the Mirarr at a briefing in London on Monday by suggesting their approval could be received in the "near-term future".

"I am happy to report that the relationship with the Mirarr people has improved dramatically in the past two years," Mr Chiaro said.

But a statement from the Gundjeihmi Aboriginal Corporation on behalf of the Mirarr on Wednesday said the traditional owners were "extremely distressed" by Mr Chiaro's interpretation of the relationship between the Mirarr and ERA. It said the Mirarrs' ultimate goal was the return of their traditional lands for inclusion in the neighbouring Kakadu National Park.

ERA produces uranium at the nearby Ranger mine. The deposit is close to being mined out, although processing of stockpile ore will keep operations going until 2020.

Jabiluka is one of the biggest undeveloped uranium reserves in the world and represents a good chunk of ERA's market capitalisation, now a reduced $4.2 billion. Opposition from the traditional owners is despite a probable royalty flow of more than 5 per cent of net revenue on Jabiluka being developed.