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Ranger uranium mine rehabilitation costs could blow out to $2.2 billion, Energy Resources tells ASX

Returning the Ranger uranium mine site to its original condition could cost up to $2.2 billion. (Energy Resouces of Australia/SkyScans: file photo: AFP)

The rehabilitation of a decommissioned uranium mine in Kakadu National Park could cost up to $1.2 billion more than expected and take two years longer than initially planned. 

Energy Resources of Australia (ERA) — a subsidiary of mining giant Rio Tinto — shut down production at its Ranger uranium mine, 250 kilometres east of Darwin, in January last year and has since been working to return the mine site to its original state.

The rehabilitation was originally estimated at $973 million, but in a statement to the ASX on Wednesday, ERA revised costs to be approximately between $1.6 and $2.2 billion.

The company also said clean-up works could continue until the end of 2028, more than two years longer than planned.

The rehabilitation of the Ranger uranium mine will cost much more and take longer than expected. (ABC News: Sara Everingham)

The Gundjeihmi Aboriginal Corporation, which represents Mirarr traditional owners, had been seeking clarity on the expected cost blowouts from ERA.

"We knew it would cost more, but a doubling — to probably the biggest rehabilitation exercise in the history of Australian mining — took us by surprise," chief executive Justin O'Brien said.

ERA's statement outlined a number of reasons for the revised cost, including engineering issues, emerging technical risks and additional water treatment costs.

"It is a complex operation and it is in a very sensitive, world-heritage-listed national park, upstream of Aboriginal communities and the Arafura Sea," Mr O'Brien said.

Federal changes needed to extend time frame

ERA's current lease stipulates the company must complete the rehabilitation and be off the mine site by 2026, a condition legislated by the Atomic Energy Act 1953.

With the rehabilitation time frame now stretching into 2028, ERA said it "has been engaging with government and key stakeholders to amend the Atomic Energy Act 1953 and extend the expiry date of ERA's tenure on the Ranger Project Area".

Mr O'Brien said a two-year extension to the rehabilitation was "pretty ambitious".

"If you're going to amend the legislation in Canberra you don't just do it for two years, you give them lots of space to do this," he said.

"If they [ERA] relinquish within another 26 years, then fine."

Chief executive of the Gundjeihmi Aboriginal Corporation, Justin O'Brien speaks about the future of Jabiru. (ABC News: Michael Donnelly)

Can ERA afford the cost blowout?

In light of the cost revision, ERA said it was "currently reviewing all available funding options to ensure that the increased forecast cost of the rehabilitation of the Ranger Project Area will be adequately funded".

As of December 31, 2021 the company had $699 million in cash funding and $535 million held by the Commonwealth government as part of the Ranger Rehabilitation Trust Fund.

ERA's parent company, Rio Tinto said in a statement to the ASX, "it is committed to working with [ERA] to ensure the rehabilitation of the Ranger Project Area is successfully achieved to a standard that will establish an environment similar to the adjacent Kakadu National Park".

Mr O'Brien said that if Rio Tinto and ERA fail to fund the rehabilitation, the Australian government would need to step in.

"At the end of the day, it is important to remember … that the Australian government is ultimately responsible for everything that happened [at Ranger]," he said.

"This is an unprecedented exercise, a mega-project of rehabilitation, in such a sensitive world-heritage listed area. People have to get this right, both the industry and government."

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