Thursday, 22 March, 2007

The Age

ENERGY Resources of Australia expects "steady improvements" in the average price it gets for the nuclear fuel, amid an expected further rise in spot prices.

The Darwin-based ERA, controlled by Rio Tinto Group, got an average of $US18.36 a pound for its uranium last year, up 15 per cent from 2005, while spot prices almost doubled to $72 by the year's end, it said in its annual report, released yesterday.

The "tight" supply and increased interest in nuclear power that led to the price gain would probably "continue in the coming year", it said.

ERA is studying an extension in the life of the Ranger mine in the Northern Territory as global demand for uranium increases.

Many of the company's long-term contracts were signed when prices were lower, preventing it from taking full advantage of higher spot prices.

"While the market is currently very strong, ERA is still working through legacy contracts signed when the market was at a low ebb," the company said in the report.

"New contracts are currently being let at higher prices as old ones expire."

Shares in ERA fell 2¢, or 0.1 per cent, to $24.28 yesterday.

ERA earlier this month said first-quarter output might fall as much as 30 per cent from a year earlier after heavy rain temporarily halted production at Ranger.

The company has agreed not to develop its Jabiluka uranium deposit near Ranger until it gets permission from traditional landowners.