March 20, 1999
Web posted at: 11:55 p.m. EST (0455 GMT)

JABIRU, Australia (CNN) - An Australian mining company is defying world environmental agencies and Aborigines to establish its Jabiluka uranium mine in remote northern Australia.

Energy Resources of Australia Ltd. made a case Saturday to push ahead with its plans before a July meeting determines whether the surrounding area can be declared environmentally endangered.

The $7.7 billion mine is adjacent to World Heritage-listed Kakadu National Park, in Australia's Northern Territory, and environmentalists fear it would be a threat to fragile neighboring wetlands.

A trial mine tunnel has reached 860 meters (2,840 feet), about halfway to the ore body, after development began late last year.

Detailed drilling to assist with mine planning is scheduled to start after the ore is reached.

ERA's chief executive, Philip Shirvington, told reporters Saturday that present site work is not commercial mining, which his company agreed not to do after the World Heritage Bureau asked that Kakadu be placed on its "in danger" list of threatened sites.

A final decision is expected at meetings of the World Heritage Bureau and its parent body, the World Heritage Committee, in Paris in July. A two-thirds vote of the 21- member committee is required to confirm the "in danger" recommendation.

Shirvington said the World Heritage Bureau report was factually wrong, a view echoed by Dr Arthur Johnston from the Office of the Supervising Scientist, an Australian government agency.

"The call for Kakadu to be declared in danger due to Jabiluka is utterly flawed in logic," Johnston said as he presented findings that ERA's nearby Ranger mine had had minimal effect on the Kakadu environment.

Shirvington said Jabiluka was not an environmental threat to the park. A recent World Heritage report said the mine posed a "potential danger" because of the risk of contaminated water leakage and ineffective storage of tailings.

ERA wants to develop Jabiluka to extend the life of its uranium mining operations. Ranger still has 10 years of life, but Jabiluka has sufficient ore for at least 25 years of mining, with the possibility that more reserves could be discovered.

Both mines have been objects of environmental protest and uncertainty over the position of traditional Aboriginal owners.

Approval was received from Aborigines, but some of them now want Jabiluka stopped.

Though not legally binding, the "in danger" classification by the World Heritage Bureau and World Heritage Committee -- both part of the United Nations -- could cause major political and international problems for Australia if ignored.

The mine could proceed under earlier plans that call for a new processing facility rather than the latest proposal to truck ore from Jabiluka to Ranger mine.

However, industry sources estimate building a new processing plant would add about $96 million to ERA's costs.

Uranium mining is staging a major comeback in Australia, backed by friendly federal government policies and an improving market.

Development plans long restricted or shelved by previous administrations are now going ahead and will see output rise sharply in the country that has the world's largest known reserves of undeveloped uranium.

Australia's federal government on Thursday approved development of the Beverley mine in South Australia, the first new uranium mine approval in Australia in more than 20 years.

U.S.-based General Atomic's Beverley venture has contracts worth A$60 million a year in place for exports to three power utilities in the United States and Asia.

Its approval closely followed the recent launch by Western Mining Corp. Ltd. of its 1.2 billion expansion at Olympic Dam copper and uranium mine, South Australia.

U.S.-owned Pangea Resources has also launched a campaign to win approval for a $6 billion spent nuclear fuel dump in central Australia.

Collectively, these plans represent the most substantial increase in nuclear fuel activity in Australia in more than 20 years, since the exploration rush that led to the discovery of extensive uranium in the Alligator Rivers region of the Northern Territory.

Backing the activity are rising uranium prices, up from a low of around $8.75 a pound last year to around $11.50.

Analysts do not expect prices to rise much further because of large stockpiles held around the world and continued U.S. and Russian selling of weapons-grade material converted to commercial uranium fuel.

However, continued rapid development of the Australian industry is likely because of a large number of undeveloped uranium deposits and a favorable political climate, they say.

Previous Labor governments restricted uranium mining to three mines. The government of Prime Minister John Howard, however, scrapped that policy soon after his re-election in 1996 and considers every application on merit.

Australia's new uranium rush is being also driven by indications from the opposition Labor Party that in government it might not close operating mines but would oppose new projects.

Reuters contributed to this report.