Rio Tinto Group's subsidiary Energy Resources of Australia (ERA) has shelved plans to proceed with the final feasibility study for its Ranger 3 Deeps project, blaming the weak uranium market.
Uncertainty over future access agreements with local authorities also prompted the company to cancel further studies at its mine.
According to the Australian company, the economics of the project require operations beyond the current Ranger authority, which is set to expire in 2021.
Regarding additional funding for rehabilitation of the mine, ERA said it will approach Rio Tinto about funding support for rehabilitation.
The company has also started discussions with representatives of land owners and the Australian Government regarding a possible extension.
ERA said it can revisit the project's economics in future, as it will continue to conserve cash until it has greater certainty for extension.
Rio Tinto said that it agrees with ERA's decision and will not support any further study or the future development of the project due to its economic challenges.
Rio Tinto is assessing a potential non-cash impairment charge of $300m relating to its shareholding in ERA.
The company said in a statement: "Rio Tinto is engaged with ERA on a conditional credit facility to assist ERA to fund its rehabilitation programme, should additional funding be required beyond ERA's existing cash reserves and the future earnings from processing ore stockpiles.
The Ranger mine is located 8km east of Jabiru and 260km from Darwin in Australia's Northern Territory.
After starting operation in 1980, the mine reached full production of uranium oxide in 1981.
Uranium mined at Ranger is sold for use in nuclear power stations in Asia, Europe, and North America.
Image: Ranger Uranium Mine in Kakadu National Park, east of Darwin, Australia. Photo: courtesy of Stephen Codrington.