Mining giant Rio Tinto has agreed to loan $100 million to a company struggling to fund the clean-up of a decommissioned uranium mine on the edge of Kakadu National Park.
Energy Resources of Australia (ERA) has been trying to find enough money to cover the clean-up of the Ranger mine, which it operated for more than 40 years.
It's estimated the rehabilitation of the mine could cost up to $2.2 billion — money which ERA does not have.
As the company's major shareholder, Rio Tinto today entered into a short-term deal to loan the miner $100 million to allow it to continue with rehabilitation work.
The two companies have been involved in a stoush over funding for months now, which culminated this week when Rio Tinto called for ERA's chairman to resign.
An ERA-commissioned independent report which suggested two other uranium deposits — the Jabiluka and Ranger Deeps 3 projects — could be mined, angered both Mirarr traditional owners and Rio Tinto last week.
As part of the funding deal, ERA has agreed to ignore the report and its valuation it placed on the uranium deposits.
ERA's chairman, Peter Mansell, and two other directors without ties to Rio Tinto resigned today, after securing the loan from the mining giant.
Rio Tinto chief executive Australia Kellie Parker said "we are committed to working with ERA to facilitate this board renewal process and urgently develop a workable plan to fund the increased rehabilitation costs".
"We restate our belief that the successful rehabilitation of the Ranger Project Area — which is of critical importance to the Mirarr People, Rio Tinto and ERA — can be achieved in a way that is consistent with the Mirarr people's wishes.
"This remains our utmost priority and commitment."
Justin O'Brien, the chief executive of Gundjeihmi Aboriginal Corporation, which represents the Mirarr people, said the organisation "welcomes the opportunity for a refreshed ERA board to properly engage with the need to source funding for Ranger's complete rehabilitation".
"This must be on the basis of the reality that mining has ceased at Ranger and is not realistic at Jabiluka," Mr O'Brien said.
"We also welcome the resolution of the short-term funding issue and the rejection of the evaluation by Grant Thornton."
ERA still needs to negotiate a long-term funding agreement to cover the remaining rehabilitation costs.
Loan comes with conditions
The $100 million loan from Rio Tinto comes with a series of conditions attached.
ERA has agreed not to use any of the money on the development of the Ranger 3 Deeps project without the approval from Rio Tinto.
Rio Tinto has long stated it will not develop Jabiluka or Ranger 3 Deeps without the consent of the Mirarr traditional owners.
If ERA is unable to repay the loan by March 31 next year, it must get an independent expert to value the company's share price, provided the expert "have regard to the Mirarr's publicly stated position in relation to the future development of Jabiluka".
Rio Tinto will then be required to purchase a portion of the shares offered by ERA.
This is the third loan Rio Tinto has made to ERA to help cover rehabilitation costs in the last six years.
In 2019, it loaned ERA $476 million and in 2016 it loaned the company $100 million.
Last month, the federal government introduced a bill to allow ERA more time to rehabilitate the mine, beyond 2026.
