Editorial: Aussie PM warming to nuke power (August 09, 2006)

There’s nothing quite like the whiff of big money to make people abandon their longest-held principles.

This time around, it’s the rising price of uranium that’s causing Australia’s leading federal politicians to rethink some of the country’s conflicted and outdated policies towards the mining, enrichment and export of its substantial uranium mineral assets.

Australia hosts a quarter of the world’s uranium resources, and is firmly in second spot among the world’s uranium producers, behind Canada.

The land Down Under produces about 19% of the world’s yellowcake from just three mines: Energy Resources of Australia’s open-pit Ranger mine in the Northern Territory; BHP Billiton’s massive open-pit Olympic Dam mine in South Australia; and Heathgate Resources’ in-situ-leach (ISL) Beverley mine, also in South Australia.

In 2005, these three mines produced 11,222 tonnes of U3O8, divided between Ranger (5,910 tonnes), Olympic Dam (4,335 tonnes) and Beverley (977 tonnes). All the uranium was exported for use in power generation, with uranium accounting for 40% of the country’s energy exports, in thermal terms.

A fourth mine, SXR Uranium One’s Honeymoon ISL-project in South Australia, is fully permitted and could be brought into production relatively quickly whenever SXR’s board gives the go-ahead.

While mining is set to cease at Ranger in 2008 (though stockpiles will be processed until 2014), the satellite Jabiluka uranium deposit could come on-stream in the years ahead if the local aboriginals come onside as they did at Ranger.

All Australia’s uranium output is exported, since the country has little domestic need, lacking both nuclear power stations and nuclear weapons.

However, in a recent speech that envisioned Australia becoming an “energy superpower,” Australian Prime Minister John Howard said that, with growing global uranium demand, there is significant potential for Australia to boost its uranium exports and further enrich its uranium prior to export.

He also noted that Australia could step up its contribution to international nuclear science.

In June, Howard established a prime ministerial taskforce to comprehensively review uranium mining and processing in Australia, as well as the role of nuclear energy in the country’s future.

Heading up the taskforce will be Ziggy Switkowski, the former CEO of Aussie phone company Telstra. Also serving will be nuclear scientist George Dracoulis and economics professor Warwick McKibbon.

A draft report from the taskforce is due in November, and the final report is due at year-end.

Meanwhile, the opposition Labor party’s leader, Kim Beazley, has just withdrawn his long-standing support of Labor’s “No New Mines” policy (also called the “Three Mines” policy) against new uranium mines opening in Australia.

The policy, which was implemented by Labor in 1984 and kept in place by all subsequent federal governments, now looks set to be narrowly overturned at a Labor convention early next year.

Standing on some shaky moral ground, Beazley is still against Australia actually using its own uranium for nuclear power generation, and only favours selling un-enriched uranium to less nervous countries, such as China.

In April, Australia and China signed an agreement that clears the way for uranium sales to China as well as some significant direct Chinese investment in Australia’s uranium sector.

There seems to be a pro-uranium shift amongst Ozzies, too: in a recent poll by Roy Morgan Research, 38% of Australians said there should be more than three uranium mines in the country, up from 25% in June. Interestingly, 59% of men in the survey favoured increased uranium production while only 18% of women were in favour.

Australia was first systematically explored for uranium beginning in 1944. Prospectors found several small deposits in the 1949-56 period in northern Australia, which were subsequently mined mainly for U.S. and U.K. weapons programs.

A second wave of uranium exploration hit Australia in the late 1960s, resulting in the discovery of most of the country’s major deposits.

Exploration activity cooled somewhat during Labor’s reign in 1972-75, though the government did take equity positions in the Ranger and Mary Kathleen uranium mines.

The institution of “No New Mines” coupled with falling uranium prices killed off most uranium exploration in Australia for the next two decades, with the exception of Olympic Dam.

In the last couple of years, Australia has experienced a sudden renaissance of uranium exploration, with more than 70 uranium juniors now active, including a handful of Canadian-listed ones.

But there are still plenty of hurdles: otherwise mining-friendly Western Australia remains hostile to the uranium players, with the state’s Labor government sticking firm in its position against uranium mining; Queensland’s Premier Peter Beattie supports the ban on uranium mining that is entrenched in state law; and less importantly, New South Wales retains its legislation against uranium mining and the building of nuclear reactors.