urg::: Waking Australia's Nuclear Giant

[Len Kanaar - FoE Sydney]

Resource Investor

Waking Australia's Nuclear Giant

By Ben Abelson
12 Sep 2005 at 11:05 PM EDT

NEW YORK (ResourceInvestor.com) -- With 40% of the world's known 
uranium reserves, Australia should dominate the world's uranium 
market. But thanks to a host of restrictive mining policies, 
Australia has long played second fiddle to Canada in terms of uranium 
production - even though Canada has less than half Australia's 
reserves.

But with surging energy prices sparking interest in nuclear fuel, and 
a joint industry-government push for mining reform gaining ground, 
Australia could find itself dominating the world's uranium markets 
within a few years.  And the 40-odd companies currently exploring the 
country for uranium could be major beneficiaries.

In recent testimony before an Australian parliamentary inquiry, 
Minerals Council of Australia CE Mitchell Hooke called the country's 
restrictive uranium policies "inherently flawed," and pushed for a 
complete overall. The policies that currently limit mine development 
date from "a time past and a justification founded in ideology, if 
not emotion more so than sound science, valid data, risk assessment 
and good public policy." Without major policy changes, he added, the 
country will miss out on significant economic opportunities.

According to Hooke, almost the entirety of Australia's known uranium 
resources can be profitably extracted at $29/lb, slightly below the 
recent spot price of $30.50/lb.

Currently, the Australian states of Queensland, New South Wales, 
Victoria and Western Australia all have various laws that prevent the 
development of new uranium projects. When coupled with other 
regulations and policies enacted by the formerly dominant Australian 
Labor Party, uranium production in the country has effectively been 
limited to three major mines.  Due to these regulations, much of the 
current Australian uranium exploration is focused on the Northern 
Territory, where the industry-friendly federal government recently 
gained control over mine approval.

Hooke's call for reform has also been echoed by Australia's highest 
mining official. Industry and Resources Minister Ian Macfarlane 
recently issued a statement urging state governments to scrap their 
mining bans, which he said were based largely on ideological 
opposition to nuclear energy.

But while Australia's own nuclear power operations are minimal, an 
expected surge in Chinese demand has helped push the uranium issue to 
the forefront of Australian politics. Last month, the Australian and 
Chinese governments said they would begin negotiations on a treaty 
that could clear the way for long-term supply contracts between the 
two countries. While about 80% of China's electricity is currently 
generated by coal-fired plants, that country's government has begun 
to invest heavily in nuclear power, and as many as 30 new nuclear 
plants could come online by 2020. All told, at least 60 new plants 
are expected to be brought online by Russia, China, India and Finland 
in the near future, according to Hooke, raising world nuclear power 
generation by some 17%.

Australian companies exported 10,664 tonnes of uranium oxide worth 
A$475 for the year ended June 30, up from 9,569 tonnes valued at 
A$364 in the year earlier. Some government officials have predicted 
that exports could triple by 2010. If Australia doesn't step up 
production to meet that demand, Macfarlane said, "buyers will go 
elsewhere to suppliers who mightn't have the same stringent rulings 
about how the source is used." The end-use of uranium exports - and 
its potential for weapons use - has been a major concern of industry 
opponents.

Australia's "three-mine policy" means that all current supplies are 
generated from the Ranger mine, operated by Energy Resources of 
Australia [ASX:ERA], a 68.4%-owned subsidiary of Rio Tinto 
[NYSE:RTP], BHP Billiton's [NYSE:BHP] mammoth Olympic Dam operation 
and privately-owned General Atomics' Beverly mine.

Besides industry titan Cameco [TSX:CCO; NYSE:CCJ], companies 
currently exploring for uranium in Australia include Arafura 
Resources [ASX:ARU], Curnamona Energy [ASX:CUY], Laramide Resources 
[TSXv:LAM], Marathon Resources [ASX:MTN], Oxiana [ASX:OXR], Paladin 
Resources [ASX:PDN], Redport Ltd. [ASX:RPT], Scimitar Resources 
[ASX:SIM] and Summit Resources [ASX:SMM].


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