THE $2.5 billion drop in market value of Ranger uranium miner Energy Resources of Australia in the past 13 months has got to be an embarrassment for its 67 per cent owner, Rio Tinto.

But Rio might not have to fret much longer, with ERA's share price free fall coming to a halt, ironically enough because Ranger's woeful production performance has driven spot prices for the radioactive material sharply higher.

According to Ux Consulting, spot prices rose last month by $US10.50 to $US73 a pound. It was the biggest month-on-month increase since June 2007 and, according to Ux, the recent uptick is seen as due largely to the problems at Ranger.

The higher uranium price has rubbed off on ERA, notwithstanding its production difficulties. Yesterday its share price showed some life at its lower levels, rising 33¢ to $10.37. But it is still well short of its level at the start of last year of $23.50 a share.

The share price crunch for ERA has prompted speculation that Rio could be tempted to bid for the minorities on the basis that Ranger's production problems will eventually be overcome. At yesterday's closing price, a bid for the minorities would cost about $850 million, assuming a 30 per cent takeover premium.

The latest production shock from ERA came last week when it revealed it was suspending processing operations for up to 12 weeks to ensure Ranger's tailings dam was not breached as a result of the ''significantly higher than average rainfall'' in the area since October.

''Water levels in the tailings storage facility are currently higher than our predictions for this time of year,'' ERA said. ''Further, the Bureau of Meteorology has forecast that the region will experience above-average rainfall for the remainder of the 2010-2011 wet season.''

Other operational issues at the mine caused ERA to scrap its final dividend for 2010 after its annual profit slumped from $273 million to $47 million.