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Rio Tinto faces $300 mln charge for aborted uranium project

(Changes lead, adds analyst comment)

June 12 (Reuters) - Rio Tinto (LSE: RIO.L - news) may have to book a $300 million provision after its subsidiary Energy Resources of Australia (ERA) decided to shelve a uranium project due to weak market conditions.

ERA, a separately-listed division in which Rio Tinto has a 68.4 percent stake, said on Thursday it would not proceed with the final feasibility study of its Ranger 3 Deeps uranium project in Australia.

ERA's shares slumped about 50 percent to a record low after the announcement. Shares (Berlin: DI6.BE - news) in Rio Tinto, which said it agreed with ERA's decision not to proceed, were little changed in both Australia and London on Friday.

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"Rio Tinto is assessing a potential non-cash impairment charge of approximately $300 million (post tax) relating to its shareholding in ERA," global miner Rio said in a statement late on Thursday.

"After careful consideration, Rio Tinto has determined that it does not support any further study or the future development of Ranger 3 Deeps due to the project's economic challenges," it said in the statement.

Uranium prices plunged after the March 2011 meltdown at Japan's Fukushima nuclear plant. Japan idled its entire industry in response, exacerbating a worldwide supply glut.

"While the ERA share price has fallen over 50 on the back of this, it should not have been a great surprise, given the lacklustre uranium price and ongoing uncertainty over approvals," said Investec (LSE: INVP.L - news) analysts.

"Ironically, removal of this project from the world's project pipeline should help the price for other producers."

Rio Tinto also said it would assist ERA in funding the rehabilitation program at the Ranger mine near Kakadu National Park, following a toxic spill in December 2013. (Reporting by Kanika Sikka and Silvia Antonioli; Editing by David Clarke)