China wants a slice of the uranium
cake By Alan Boyd
SYDNEY - Through the darkest days of the
Cold War, the world's largest uranium reserves
stayed mostly untouched in their underground
deposits, in a silent warning of the dangers of
nuclear proliferation.
But
a different kind of fright factor has dredged up a
new debate over what to do with thousands of tons
of Australian uranium. If the deposits are now
opened to all-comers, the biggest slice could go
to countries that were on the other side during
the ideological standoff - especially China.
Canberra wants to lift decades-old restrictions on the mining
of uranium to counter the threat of global
warming, which is raising the political heat on
dirty fossil fuels like coal and oil. And it has
found an unlikely ally in the
trade union movement.
An estimated 40% of
the world's proven uranium reserves are found in
Western Australia, Queensland, South Australia and
the Northern Territory. Sprawling Roxy Downs, in
South Australia, alone accounts for one-third of
known deposits. But only two of dozens of
potential mines are in operation and they produce
a modest 20% of the global supply, thanks to a
1984 accord between unions and the Labor Party
government of the time that severely restricted
export sales.
Australia is the only major
uranium producer that doesn't have nuclear-fired
power stations - another legacy of the labor pact
and strong opposition by environmental groups. [1]
But this could now change.
In the first
break in labor ranks, the powerful Australian
Workers Union (AWU) has called on the Labor
government in Queensland to end its opposition.
Queensland and Western Australia both have blanket
bans on mining.
"I think we should have a
practical debate about this and not an emotional
one," said AWU national president Bill Ludwig.
"We've got no in-principle opposition to nuclear
power, provided it is done in a responsible way."
The AWU was motivated by recent studies by
the scientific community that argued nuclear
fission offered the only realistic means of
Australia meeting its future energy needs without
relying on fossil fuels. Prime Minister John
Howard had already come to the same conclusion -
publicly at least - though some might want to
question his sincerity on the global warming
issue, given the government's patchy record.
Australia was one of only two developed
nations - the other was the US - that did not sign
the Kyoto Treaty on reducing greenhouse gases.
Instead, it has helped found a breakaway movement
that critics charge could undermine that pact.
In July, Canberra drew up the Asia-Pacific
Partnership on Clean Development and Climate with
the US, Japan, South Korea, China and India,
aiming to confront global warming through the
softer option of technology transfers. Together
these countries account for almost half of the
world's greenhouse gas emissions.
While
Japan and Korea ratified the the Kyoto Treaty,
India and China were both exempt as its provisions
applied only to developed countries.
Washington and Canberra cited the absence
of big Third World polluters like China and India
as their prime reason for not signing the treaty.
The critical element of the breakaway agreement is
that it encourages the two Asian giants to
progressively switch to cleaner fuels, including
nuclear energy.
China obtains only 2.2% of
its power from nuclear energy, mostly relying on
domestic coal supplies that are cheap but of
notoriously poor quality. It has nine operating
reactors, with two more under construction and a
further 27 in medium-term growth plans.
State-owned China National Nuclear
announced in July that $64 billion would be
invested in nuclear power between 2005 and 2020,
boosting output from reactors by almost 400%.
Most Indian power output also comes from
non-renewable sources and there are plans for a
major escalation of nuclear power. Currently 2.8%
of energy is derived from 18 reactors and another
32 are either under construction or proposed.
Beijing has been lobbying Canberra for
years to retract the uranium export restrictions.
It finally broke through in August, when the
federal government quietly opened exploratory
negotiations on an export license without telling
the labor movement.
And it may not stop
there. A consortium of Chinese companies also
wants to take direct shareholdings in Australian
uranium mines as part of a $7.5 billion package of
minerals investment aimed at ensuring long-term
raw material supplies for industry.
There
are already low-level Australian exports to 28
countries, headed by the US, western Europe, Japan
and Korea. Much of the US and European uranium has
traditionally been used in weapons systems.
The most obvious objection to a broader
export policy is a security one: how to ensure
that China - and possibly India, further down the
track - do not divert their shipments for military
use, which could draw Canberra into tensions over
Taiwan and Kashmir.
Australia's policy is
that uranium oxide - yellowcake, the exportable
form of the mineral - is sold only for power
generation, scientific research or medical needs,
and exclusively to countries that have ratified
the United Nations' nuclear Non-Proliferation
Treaty (NPT). This immediately excludes India and
Pakistan, which are not NPT members.
The
NPT signatories are bound by a system of
safeguards against the onward sale or diversion of
nuclear materials that might be used by other
states to produce weapons. Nuclear weapons states
face additional checks.
Shipped uranium
may not be sent to a third party, reprocessed or
generally enriched beyond 20% uranium-235, the
level needed to transform yellowcake into
fissionable material. Other leading producers,
including Canada and the US, have similar export
codes.
An accounting system follows the
ore from the time it is mined until it is
reprocessed or stored as nuclear waste. But in
practice, it has proved almost impossible to
ensure that material is not diverted, as there are
no identifying characteristics that distinguish
particular uranium shipments.
The
International Atomic Energy Agency, which monitors
the NPT, lacks enforcement powers, relying instead
on a raft of diplomatic, political and economic
measures that were found wanting in North Korea,
Iraq and Iran. As China is Australia's biggest
trading partner, it is likely the mining companies
will prevail.
Before negotiations begin in
earnest, Canberra will have to convince a
skeptical electorate, especially in resource-rich
Queensland and Western Australia, that national
interests would be served by bringing the Chinese
in as junior partners in an industry that already
has equity from European and North American firms.
Howard's dilemma is that the two big
mining states already earn billions for dollars
from coal exports to the same countries that would
be targeted for uranium shipments. Hence the
reluctance to commit to emission controls under
the Kyoto Treaty that might affect coal sales.
Not all labor unions are on side, and nor
are the two bigger state governments. Production
could be stepped up in South Australia and the
Northern Territory, which don't have coal
deposits, but eventually a national policy will be
needed.
Canberra doesn't have a lot of
time to work on public opinion, as Australian
producers could miss the export boat if they don't
gear up production soon.
Global spot
prices for uranium oxide have surged by 200% in
the past two years as reserve stockpiles, mostly
accumulated from decommissioned Soviet nuclear
weapons and recycled material, have become
depleted. Mine output only meets 50% of demand by
the power sector.
In Australia's absence,
Canada has cornered the biggest market share with
a far smaller resource base, though Australian
exports are expected to triple by 2010 with or
without the restrictions.
Mining
conglomerates, which won't put serious money in
until the political dust has cleared, want
Canberra to remove uncertainties over the security
issue by taking the lead in upgrading
international safeguards on the handling of
uranium.
"Australia has some fairly
stringent standards in terms of the mining of
uranium, as well as the export licenses that go
with that," Arafura Resources chief Alastair
Stevens said after his firm raised $1.5 million in
a shares offer to fund more exploration. "We are a
responsible member of the international community,
especially in radioactive sources, so were seeing
that as being a role that Australia could foster."
Note [1] Lucas Heights
near Sydney has been the center of the Australian
government's nuclear operations since 1956. The
focus of the facility has changed from preparing
for nuclear power in Australia to a broader range
of nuclear activities including nuclear power,
uranium mining , nuclear medicine and nuclear
research, industrial uses, and environmental
management of former uranium mining sites. Two
nuclear reactors have been built at Lucas Heights.
Alan Boyd, now based in Sydney,
has reported on Asia for more than two decades.
(Copyright 2005 Asia Times Online Ltd.
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underground
deposits, in a silent warning of the dangers of
nuclear proliferation. 
