Rio Tinto's ERA uranium goes to China
Matt Chambers | July 26, 2008 The Australian
ENERGY Resources of Australia has signed what is believed to be the first deal to export Australian uranium to China.
The contract is for a small one-off shipment in the fourth quarter, a spokeswoman for Rio Tinto, which controls ERA, said.
"It is hoped this will lead to a good relationship for the future," she said.
The uranium will go to a Chinese electricity company, but neither Rio nor ERA would say where it was located or give any more details.
Australia struck a deal to supply uranium to China in 2006, but it is thought the uranium, from the Ranger mine in the Northern Territory, will be the first sent to China from here.
"We're very happy to be opening up this new source of demand," Rio energy and minerals chief executive Preston Chiaro told analysts.
Rio was looking at acquisitions as it sought to expand its overall uranium output to tap into an expected increase in nuclear power use, he said. Kazakhstan was one area the company was considering.
ERA yesterday reported a sixfold rise in first-half profit because of higher uranium prices but was hit by rising costs and the strong dollar.
ERA said net profit after tax for the six months to June 30 was $54.4 million, up from $12.4 million a year earlier.
The low year-earlier result was partly because of heavy rains at the Ranger uranium mine in the first half of the previous year.
Rob Atkinson, general manager of Rio's Weipa bauxite operations, would take over as chief executive from September 8, ERA said. Current chief executive Chris Salisbury finishes this month and will move to Rio's Gove operations.
ERA received an average price of $US35.69 a pound for its uranium oxide, up from $US16.90 in the first half of the previous year.
The gain was due to a higher proportion of sales going into more recent contracts signed at higher prices.
The average long-term uranium price for the half was $US90.83 a pound, up from $US86.67 a year earlier.
ERA sells uranium through long-term contracts and is not subject to the volatile spot market, where prices are now about $US65 a pound after last year soaring above $US130.
Mr Chiaro said he thought the spot market was showing signs of bottoming.
Revenue was crimped by a 19 per cent rise in the dollar from the previous first half, while operating costs rose due to big increases in diesel, lime, acid and pyrolusite.
"In addition, ore characteristics have resulted in increased acid consumption," ERA said.
The harder to process ore is being encountered, as sulphuric acid prices soar to record levels.
An ERA spokeswoman said the company used between 40 and 80kg of acid per tonne of ore processed and 1.05 million tonnes of ore were processed last quarter.
CTS
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