Australian Financial Review PUBLISHED: 04 Apr 2011 Online Street Talk Edited by Sarah Thompson and Khia Mercer
While Rio Tinto has kept mum until now on its views on China Guangdong Nuclear Power's bid for Extract Resources shareholder Kalahari Minerals, it has made it clear to analysts that it still expects to be involved in the development of Extract's huge Husab uranium deposit in Namibia.
Citing a briefing by Rio's energy CEO, Doug Ritchie, Merrill Lynch has highlighted Rio's bullish views on uranium, despite the Japanese nuclear catastrophe. At least from Rio's standpoint, any investment in uranium projects will not be halted, Merrill analysts have advised clients.
Ritchie, according to Merrill, pointed to the opportunity for a joint venture at Husab - the uranium deposit formerly known as Rossing South - "where a standalone project may be uneconomical."*
A joint venture structure at Husab, currently owned 100 per cent by Extract, would result in production from both Rossing and Husab of about 10 million tonnes per year of uranium oxide, up from about 4 million at present from Rossing alone, Merrill reckons.
Rio owns stakes in both Kalahari and Extract, but has yet to respond to China Guangdong's proposed takeover offer for London-listed Kalahari, which is itself looking uncertain given the slump in uranium equities the world over since the March 11 quake that triggered the nuclear disaster at the Fukushima Daiichi reactor.
Meanwhile, despite the numerous problems affecting the Rio-controlled Energy Resources of Australia uranium operation at the Ranger mine in the Northern Territory, Rio has no immediate plans to divest the interest, Merrill notes.
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