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2 Australian uranium to fuel
Asia By Andrew Symon
SINGAPORE - Australia is primed to become
the major source of uranium used to fuel Asia's
growing nuclear power ambitions after last week's
decision by the opposition Australian Labor Party
(ALP) to remove age-old restrictions on
uranium-mining operations.
Australia is
home to the world's largest proven uranium-ore
reserves and is currently the world's
second-largest producer and
exporter after Canada.
Australia currently produces 23% of the world's
uranium supply, and regionally competes mainly
with Kazakhstan, the world's third-largest
supplier with the second-largest proven reserves,
for Asian markets.
Until now, Australian
output had been restricted because of 25-year-old
ALP policy that restricted uranium-mining
operations to just three mines - albeit one of
which, Olympic Dam run by Australia's BHP
Billiton, is the largest in the world. While Prime
Minister John Howard's conservative
Liberal/National Coalition government has no
opposition to uranium mining, the country's
federal system grants control and power over
mining activities to state governments, and the
ALP has long held sway in those areas with uranium
reserves.
Australian miners, meanwhile,
are salivating at the prospects for launching new
projects - with an eye on China's growing and
Southeast Asia's aspiring appetite for uranium
oxide. According to one industry projection,
Chinese demand will grow from 1,300 tons per year
at present to more than 10,000 tons per year - or
equal to Australia's current total annual
uranium-oxide exports.
Currently Australia
does not export uranium to China, partly because
Beijing's nuclear demand is only now surging, and
partly because Australia requires contractual
assurances that uranium exports will not be
diverted to weapons programs. The two sides agreed
in April 2006 to facilitate the trade as part of
negotiations toward a preferential free-trade
agreement.
According to the World Nuclear
Association, more than 50% of the world's new
nuclear power plants expected to come online over
the next two decades will be built in Asia, a
heady projection based on publicly available
statistics for plants now in construction, planned
or proposed. If all those plans come to fruition,
Asia's total generation capacity is set to rise
from its current level of 80,000 megawatts to
190,000MW. Asia's current operating nuclear
capacity is just over 20% of the world's total.
It's still too early to tell exactly how
fast - or slow - Asian demand for uranium will
grow over the medium term, which as an alternative
energy source will no doubt be dictated by global
fossil-fuel prices. Nuclear power's advocates
argue that it is an obvious answer to reducing the
growing amount of greenhouse-gas emissions
emerging from Asia, while at the same time
cost-effectively meeting Asia's burgeoning
electricity demand.
Surging nuclear
demand China and India are largely driving
the surge in uranium demand, followed by Japan and
South Korea, both of which already have
substantial nuclear capacity. Taiwan also has
significant nuclear plants, with further units
under construction. Elsewhere, there are stated
ambitions among non-nuclear countries, including
Indonesia, Vietnam, Myanmar, Bangladesh (which
recently signed a nuclear-cooperation agreement
with China) and most recently Thailand.
India, which aims for a major expansion of
its nuclear-power capacity, is currently barred
from importing Australian uranium because it is
not a signatory to the nuclear Non-Proliferation
Treaty. The US, however, is prepared to relax its
restrictions on fuel and technology exports to
India, although final agreement on terms and
conditions have not yet been reached with New
Delhi.
For Australia, the prospect of a
uranium-export bonanza is a relatively recent
phenomenon. Until a few years ago, uranium did not
spark much interest in the mining industry, with
uranium-oxide prices languishing at less than
US$10 a pound. Those market prices have recently
skyrocketed to $50 a pound, fueled by both real
demand and speculative investments by hedge funds
and private-equity outfits.
On the
Australian Securities Exchange, there is already a
boom under way, with share market prices of small
exploration companies boasting uranium prospects
sharply rising. One investment adviser, Warrick
Grigor, recently told a conference in Hong Kong,
"It is amazing how many companies are now
reporting 'hot rocks' and radioactive anomalies on
their licenses." Recent Chinese investments are
also driving up mining shares on the Australian
bourse.
Australia seems set to add uranium
ore to its already strong and growing list of
commodity exports to Asia. At the same time,
rising global demand growth is already raising
fears of possible shortages and heated political
competition for uranium resources. Those concerns
were underlined last year during a visit to
Kazakhstan by then-Japanese prime minister
Junichiro Koizumi when Japanese utilities urged
him to lock into a long-term uranium-ore supply
contract because of concerns China was sniffing
around the same supplies.
The actual
realization of the many proposals and plans for
new nuclear plants is still a wild card. China is
quickly advancing its
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