Rio Tinto will be able to proceed with the cleanup of Ranger uranium mine
With its admission that it plans to fully take over Energy Resources Australia (ERA), Rio Tinto will be allowed to proceed with the cleanup of the Ranger uranium mine.
The Guardian reported that Rio Tinto’s plans to help fund the cleanup of the mine were blocked after Zentree Investments, which owns about 16 percent of ERA, objected to the proposal.
The admission by Rio Tinto fulfils conditions set by the Takeovers Panel.
ERA is required to remediate the mine site to a level where it can be incorporated into the surrounding Kakadu national park by 2026 but does not have enough money to do so.
To fund the cleanup, the company asked shareholders to tip in an additional $476 million, money Rio Tinto says it would provide if other investors don’t want to pour cash into a deal that is unlikely to provide any financial return to ERA.
ERA also agreed not to develop another mine at Jabiluka, to the north of Ranger, which is bitterly opposed by Mirrar traditional Aboriginal owners of lands in the north of Australia’s Northern Territory.
However, hedge fund Zentree Investments objected to the underwriting arrangement, which it said was unfair to minority shareholders and stopped ERA’s management accepting any other offers.
Zentree has long complained that Rio Tinto has its eyes on hundreds of millions of dollars in valuable tax losses run up by ERA.
The Takeovers Panel initially ruled the deal was unacceptable, but then agreed it could go ahead if Rio Tinto revealed what it intended to do if, as a result of the underwriting arrangement, it ended up owning more than 90 perncet of ERA.
Rio Tinto revealed that if it hit the 90 percent mark, it would compulsorily acquire the remaining shares.
A spokeswoman for the Gundjeihmi Aboriginal Corporation said it welcomed the Takeovers Panel decision.
“Protection of Mirarr country and all inhabitants of Kakadu national park from long-term contamination and damage is absolutely essential,” she said.
Meanwhile, the panel published its reasons for its initial decision declaring the Rio Tinto underwriting deal unacceptable.
The panel, made up of investment banker Ron Malek and corporate lawyers Amy Alston and Neil Pathak, found that Rio Tinto “applied significant pressure” to ERA to accept the underwriting deal.
It also revealed that ERA considered selling 50 percent of the Jabiluka project in the middle of last year.
Three potential buyers were approached but only one expressed interest in buying the mine.
“ERA ended its engagement when the company contacted traditional owner representatives without ERA’s consent — who expressed significant concerns regarding any engagement with that company and any transaction,” the panel said.