Mining giant Rio Tinto’s plans to clean up the controversial Ranger uranium mine have been thrown into doubt after objections from a Singapore-based hedge fund.
The mine is owned by ASX-listed Energy Resources Australia (ERA), which in turn is 68% owned by Rio Tinto.
ERA is required to remediate the mine site and return it to a state fit to be incorporated in the surrounding Kakadu national park, by 2026.
There have been longstanding concerns about the risk of a uranium leak from the Ranger mine, amplified by its location at the eastern end of the remote national park in the Northern Territory.
A decade ago it was revealed contaminated water was leaking every day from a tailings dam. In 2013 a burst leach tank at the mine released up to 1m litres of acidic radioactive slurry.
Those concerns, which contributed heavily to Mirrar native title holders insisting that mining cease, underscore the risk if the site is left without remediation.
Last month, ERA asked shareholders to tip in an additional $476m to finance the clean-up operation, and Rio Tinto said it would guarantee the money if no other shareholders wanted to contribute.
If no other shareholders participate – quite likely as the deal is not expected to generate any financial return for ERA – Rio Tinto will end up with more than 95% of the company’s shares.
As part of the underwriting agreement, ERA also undertook not to develop a mine at Jabiluka, to the north of Ranger, which has been strenuously opposed by the Mirrar traditional owners.
However, the entire plan was thrown into disarray on Wednesday after the Takeovers Panel put conditions on the deal following a complaint from Singapore hedge fund Zentree Investments, which owns about 16% of ERA and is controlled by investor Richard Magides.
Magides could not be reached for comment but in the past has reportedly accused Rio Tinto of trying to get its hands on $646m in tax losses run up by ERA.
He also claimed Rio Tinto has overstated the cost of remediation and called for the development of Jabiluka, which ERA has agreed not to mine without the consent of the traditional owners, and another resource, Ranger 3 Deeps, which the company regards as uneconomic.
The deal proposed by ERA and Rio Tinto would have allowed Rio Tinto to compulsorily buy Zentree’s stake if it ended up with more than 90% of the company’s shares. This would give it complete control of the company and allow it to consolidate it into its corporate group or wind it up.
But the Takeovers Panel has barred Rio Tinto from doing so for a year.
The panel found that “Rio Tinto sought to consolidate control and acquire ERA” through the underwriting arrangement because minority shareholders were unlikely to participate, but had not given enough information to the market about its intentions once it had the company in its grip.
ERA had also not done enough to ensure a board committee looking at the issue was sufficiently independent of Rio Tinto, the panel said.
It is not clear whether Rio Tinto would be willing to stump up the $464m potentially required if it is barred from taking full control of ERA. Guardian Australia understands traditional owners remain confident that Rio Tinto will do so regardless.
“Adequate funding for comprehensive clean-up of the Ranger site is essential,” a Gundjeihmi Aboriginal Corporation spokesperson said. “[Gundjeihmi Aboriginal Corporation] welcomes ERA and Rio Tinto’s commitment to finding a funding solution to restore country.”
On Friday, Rio Tinto applied for a review of the decision.
