By Belén Carreño
MADRID (Reuters) - The Spanish government has decided not to deliver the permits necessary to open the European Union's only open-cast uranium mine near Salamanca, dealing a serious blow to Australian mining company Berkeley Energia's (AX:BKY) plans.
The project was granted preliminary approval in early 2013 but has since faced local opposition.
Berkeley said earlier on Tuesday it was still confident it would obtain the last two major permits needed for the mine to start operating - a local building licence and an authorisation given by the government to handle radioactive waste - though it would also scale down its existing local corporate operations.
"The government will wait for the ongoing proceedings to go through but it will say no," a government source said on condition of anonymity.
Spain's energy and environment ministry declined to comment. The Nuclear Safety Council and Berkeley Energia had no immediate comment.
A second source, directly involved in the proceedings, said Berkeley was "living in a parallel universe" when it said the mine would soon become a reality.
"The authorisation to build the mine is only possible when the nuclear authority has handed over its report, which is still a long way," said the source, adding he believed the mine would never see the light of day.
The nuclear authority is due soon to renew its board and the Socialists and junior parliamentary allies Podemos, who both oppose the project, will hold a majority in it.
A neighbouring mine run by public company ENUSA was previously in operation near the site in Retortillo in Salamanca province, but closed in 2000 after it failed to turn a profit.
Berkeley, which has a triple listing in Britain, Spain and Australia and operates no other projects, has insisted the planned mine can be profitable since conducting initial studies in 2007.
The price of uranium fell heavily following Japan's Fukushima nuclear disaster of 2011 and for years struggled to recover.
This year, however, investors hope for profits as prices have rallied, helped by London-listed investment vehicle Yellow Cake, which has been buying and storing the element.
Berkeley said the mine would run for 14 years, generating investment of over 250 million euros ($290 million) and more than 2,500 direct and indirect jobs in the region.
In a study presented to Australian investors, the firm said the mine is capable of generating strong, sustainable cash flow as a result of recovering demand and growing appetite for uranium ore coming from China.
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