BRAZILIAN mining giant Vale has dipped another toe into Australia's uranium exploration sector, agreeing to acquire up to 80 per cent of a West Arnhem Land project.

Vale will fund the first $1 million of exploration over two years at Uranium Equities' Headwaters project, in the East Alligator uranium field, if two of four exploration licences are granted.

Following that, Vale can earn a 70 per cent interest in Headwaters by funding all exploration through to the start of a feasibility study.

Vale does not produce uranium but has been acquiring ground as it moves to diversify production.

In 2007 it entered a joint venture in Western Australia with Dioro. It also has ground in Canada.

Perth-based Uranium Equities said one exploration licence was granted and talks were continuing with Aboriginal owners about the other three.

Vale can earn an extra 10 per cent of the project by funding a feasibility study.

Uranium Equities shares dropped 1c, or 9 per cent, to 7c on the news.

Separately, Rio Tinto pulled out of a Zambian uranium exploration joint venture with Zambesi Resources as part of cuts to exploration spending.