Fukushima fallout 'to hurt prices for years'BY: BARRY FITZGERALD...

Fukushima fallout 'to hurt prices for years'
BY: BARRY FITZGERALD From: The Australian February 02, 2012 12:00AM

http://www.theaustralian.com.au/business/mining-energy/fukushima-fallout-to-hurt-prices-for-years/story-e6frg9df-1226260014906

RANGER uranium miner Energy Resources of Australia has warned that demand fall-off following last year's Fukushima nuclear disaster in Japan means uranium prices are likely to remain subdued until at least 2014.

The warning came as ERA, a 68 per cent-owned, listed subsidiary of Rio Tinto, confirmed it plunged in to losses last year as the Ranger mine inside Kakadu National Park battled to deal with record rainfall.

ERA plunged from a $47 million profit in 2010 to a loss of $153.6m after a previously announced charge of $99.4m for a low-grade inventory value adjustment.

Ignoring the charge, the group's loss on an underlying basis of $54.2m was higher than most analysts had been expecting.

ERA was forced last year to raise $500m from Rio and its minority shareholders to fund long-term water handling solutions at Ranger.

Flooding at the operation forced the suspension of processing operations between the end of January to mid-June last year. No dividend has been declared (8c per share in 2010).

ERA shares fell as much as 12 per cent to $1.35 yesterday as investors absorbed the loss and the downbeat assessment of where uranium prices are headed.

The warning that it could take until 2014 before uranium prices recover dashes hopes of investors who have in recent weeks bought in heavily to Australian and Canadian uranium producers and explorers in the expectation that uranium demand would rebound more quickly from Fukushima than first thought.

ERA told analysts at a briefing yesterday that the uranium market would remain subdued until excess supply, caused by Japan's nuclear shutdown and curtailments elsewhere, cleared the market.

It said market prices were expected to rise in the 2014-2020 period, driven by an expected shortfall in production from proposed new mine developments.

The spot uranium price is $US52 ($48.90) a pound, having weakened from more than $US70 a pound after the Fukushima plant suffered a partial meltdown when it was hit by a violent earthquake and a subsequent tsunami on March 11.

"In the short term, the uranium market appears to be adequately supplied with utilities holding sufficient inventories and there is mostly discretionary demand in the market," ERA said.

"Following the Fukushima accident, buying slowed as utilities in Japan and around the world conducted extensive nuclear safety reviews."

ERA said the market would remain at current levels "until demand increases and nuclear plants in Japan begin to restart."