Atomic Allies?: India and Australia Explore Uranium Sales
Image Credit: Office of the Prime Minister: Australia (Flickr)

Atomic Allies?: India and Australia Explore Uranium Sales

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Australian Prime Minister Julia Gillard’s stumble during her recent visit to India’s Mahatma Gandhi memorial may have caught the media’s attention. But it was her diplomatic fleet of foot in paving the way for uranium exports to Asia’s third-largest economy that has proponents hopeful of a new boom in production, particularly in the state of Queensland.

During her three-day visit, Gillard told Indian Prime Minister Manmohan Singh that talks could now commence on sales of Australian uranium to nuclear-armed India, following Gillard’s reversal last year of her Labor Party’s longstanding ban.

"Prime Minister Singh and I have agreed that we will commence negotiations for the nuclear safeguards agreement, the civil nuclear cooperation agreement given Australia is now prepared to sell uranium to India," she announced at a press conference on October 17.

For Australia, a bilateral Civil Nuclear Cooperation Agreement is a prerequisite for sales of uranium to another country, although it is expected to take at least a year or more before exports commence.

Dr. Singh stressed that the lifting of the uranium ban was crucial to improving ties, with Gillard’s three-day visit “bound to open a new chapter in India-Australia relations”.

“Under Prime Minister Gillard, the Australian Labor Party has articulated a new policy on uranium sales to India. This is recognition of India's energy needs as well as of our record and credentials,” Dr. Singh said.

“I have expressed to Prime Minister Gillard India's appreciation of this development.”

The move came despite India’s nuclear industry reportedly being described by its auditor-general as unsafe, disorganized and in many cases, unregulated. Australia had previously ruled out yellow cake exports to India due to its refusal to sign the Nuclear Non-Proliferation Treaty, but its 2005 agreement with the United States over civil nuclear power paved the way for the ban’s lifting.

India is reliant on uranium imports for its nuclear power industry, with only nine of its 20 operating reactors running on domestic uranium. Current nuclear generating capacity of 4,780 megawatts is expected to double with another 6700 megawatts under construction.

Despite the impact of the Fukushima disaster and Germany’s phasing out of nuclear power, India remains committed to its target of 25 percent power from nuclear by 2050 compared to the current 2.5 percent.

Australia has around 40 percent of the world’s known uranium deposits, but only 16 percent of production, according to the government, giving the domestic industry room for expansion.

Queensland seizes opportunity

Center-left state Labor governments have traditionally been reluctant to embrace nuclear power, and Queensland has been no exception. The former Goss government imposed a ban on mining in 1989, with the state’s last mine, Mary Kathleen, closing down in 1982.

Yet with the known uranium resource in Queensland valued by the AUA at around AUD$18 billion (US$18.6 billion), the temptation to end the ban was too great.

Despite earlier ruling out a policy change, recently elected Premier Campbell Newman announced on October 22, just days after Gillard’s return from India, that Queensland would join other states in actively pursuing uranium mining.

“The Prime Minister Julia Gillard has just been in India selling the benefits of Australian-produced uranium to India, prompting many in the community to ask about the industry’s potential in Queensland,” Mr. Newman said in a statement.

“It’s been 30 years since there was uranium mining in this state, and in that time Northern Territory, South Australia and Western Australia have carved out successful uranium industries that deliver jobs and prosperity to their regions.”

Despite ruling out any nuclear energy production or waste disposal plants in Queensland, environmental critics denounced the move.

"This is not the time for Queensland to give a green light to yellowcake," Australia Conservation Foundation Northern Australia Acting Manager Andrew Picone said.

"There is no compelling economic case, there is no accepted social license and the lessons of Fukushima need to be addressed not ignored. This industry is unsafe, unwelcome and underperforming."

However, the Queensland Resources Council (QRC) welcomed the move as overturning the previous government’s “illogical stance.”

“The government's decisive action…will provide a strong boost to the regional economies of north and north-west Queensland,” QRC chief executive Michael Roche said in a statement, estimating the creation of 1,000 permanent jobs and 2,500 construction jobs as well as AUD$900 million in state royalties.

Yet while Queensland may have changed course, its southern counterparts in New South Wales and Victoria – also ruled by conservative governments – have shown no inclination to reverse their mining bans.

Crisis, what crisis?

Led by China and India, the global nuclear power industry appears to have shrugged off any sense of crisis after Japan’s March 2011 Fukushima meltdown. Currently around 450 plants are in operation worldwide, with an additional 65 under construction, 160 planned and 323 proposed, with countries including the United States keen to secure low emission, base-load power.

According to mining analyst Edward Sterck of BMO Capital Markets, nuclear power expansion in China, the Middle East and Russia as well as India will increase global capacity by 37 percent by the end of the decade.

“In terms of demand for uranium, this translates into demand growth from 185 million pounds today to 278Mlb by 2010 and 304Mlb by 2025,” he told the Investing in Asian Mining Indaba conference in Singapore on October 29.

Far from slumping, uranium appears set for a rebound and Australia’s producers can thank India for making it happen.

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