MENU

Are you exposed to unfathomable investment risk?

When I wrote last week about the risks of investing in uranium mining, I couldn’t have predicted that Australia’s oldest mine would so comprehensively prove my point so quickly. Energy Resources of Australia (ASX: ERA) owns the Ranger uranium mine near Kakadu National Park, in the Northern Territory. In turn, Energy Resources is majority owned by Rio Tinto (ASX: RIO).

The Ranger mine ceased last year because the near-surface resource was exhausted. The company hopes to start a new underground mine, beneath the pits at Ranger. Alternatively, Energy Resources of Australia would seek to start a new uranium mine at Jabiru. However, the local indigenous people, the Mirarr, have asserted their opposition to the mine at Jabiru, because it is a site of cultural significance. Personally, I think we could all learn something from their attitude towards environmental stewardship.

Processing at the Ranger Mine has ceased due to a spill of up to one million litres of radioactive acid. Although the company denies that the contamination was released into the Kakadu National Park, it seems like a possibility, as the company does have a history of problems. This leak is a setback because the company has promised not to conduct further mining at Ranger without the approval of the Mirarr people. Investors are hurting since the incident, with Energy Resources of Australia’s share price down more than 25%.

The Mirarr aren’t buying the miner’s line on the contamination threat either. A press release on Sunday decried the bursting of a tank containing toxic radioactive acid “within the bounds of Kakadu National Park.” The CEO of the Gundjeihmi Aboriginal Corporation, representing the Mirarr, said: “People living just a few kilometres downstream from the mine don’t feel safe. How can we trust the assurances of a company which has repeatedly failed to safely manage this highly toxic material?”

And well might we all ask that question. The Olympic Dam uranium mine owned by BHP Billiton (ASX: BHP) isn’t much better. That mine has reported over 30 spill incidents since 2003. I can’t help wondering if the workers at these mines are safe.

Foolish takeaway 

When a big multinational mining company does uranium mining it’s risky enough for investors and society. The risk of investing in newcomers, such as Paladin Energy (ASX: PDN) or Toro Energy (ASX: TOE) is extreme. The world doesn’t need new uranium mines and they are dangerous. Investors in these companies are betting that governments be allowed to sell out future generations for short-term profits.

Want to grow your profits and receive a great dividend?

Check out our exclusive analysis of 3 of our favourite long-term investments available at an attractive price, today. Each company pays an excellent dividend and boasts a strong underlying business. Check out our special FREE report "3 Stocks for the Great Dividend Boom" to discover the names of 3 of the best companies to buy now. Click here now to find out the names, stock symbols, and full research for three of our favourite income ideas, all completely free!

Motley Fool contributor Claude Walker (@claudedwalker) does not own shares in any of the companies mentioned in this article.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.