Energy Resources of Australia Ltd., the uranium producer controlled by Rio Tinto Group, dropped the most in Sydney in more than five months after saying prices in the first half of 2010 may be lower than previously expected.

Energy Resources fell as much as 5 percent to A$18.71, the biggest decline since Oct. 29, compared with a retreat of 0.4 percent in the benchmark S&P/ASX 200 Index. The shares traded at A$18.96 at 10:18 a.m. local time.

Production in the first quarter fell 27 percent because the ore extracted was of a lower grade, the Darwin-based company said in a statement today. The producer of about a 10th of the world’s mined uranium reported output of 888 metric tons, or almost 2 million pounds, compared with 1,214 tons a year earlier.

The spot price of uranium dropped to $41.75 a pound at the end of March, down $2.75, or 6.2 percent, from December, it said. “These softer market conditions will have a partial influence” on the average price received during the first half of 2010, Energy Resources said. The company previously said it expected 2010 prices, output and sales to remain close to 2009 levels.

Energy Resources, which sells uranium to power utilities in Asia, Europe and North America, has said this year that it expects long-term nuclear fuel demand to rise as countries seek alternatives to coal and oil to reduce greenhouse gas emissions.

The operator of the Ranger mine in Australia’s Northern Territory has said that it expects nuclear plant construction to increase, driven especially by growth in China.