uranium exports to rise fivefold
Uranium exports to rise fivefold
Andrew Trounson April 04, 2006
AUSTRALIA'S export earnings from uranium appear set to rise by almost five times within the next 10 years, to about $2.3 billion, courtesy of rising prices, new demand from China and an expansion of BHP Billiton's Olympic Dam mine in South Australia.
And that is all without the Labor-controlled states of Queensland, Western Australia and South Australia lifting their bans on new uranium mines, raising the prospect of additional earnings.
But the trade with China might only deliver Australia about $300million, with our mines supplying an expected one-third of China's annual needs.
For a commodity that is earning Australia just more than half of what we earn from cheese exports, it is a big jump, primarily driven by the world's rising demand for power and a drawdown in ex-military stockpiles that would have to be compensated for by new production.
But amid all the hype and security fears over yesterday's signing of a nuclear safeguards treaty that, for the first time, allows Australian mines to sell uranium to a nuclear-armed China, the resource will still rank a long way behind coal, iron ore, oil and gas in terms of its relative importance to the Australian economy.
Australia sold almost $4billion worth of iron ore to China in 2004-05 and sales will top $6billion in 2005-06. Australia exported more than 11,200 tonnes of uranium oxide in 2004-05, generating $489million in export income, compared with $875million from cheese.
But those uranium earnings numbers reflect long-term price contracts that do not account for market prices almost quadrupling to more than $US40 a pound in less than three years.
The Australian Bureau of Agricultural and Resource Economics is now forecasting long-term prices at just less than $US30 a pound.
On top of that, BHP Billiton plans to triple uranium production at Olympic Dam, to 15,000 tonnes, by 2013.
US-based General Atomics expects to add 500 tonnes to production at its Beverley mine in South Australia from 2009. It produces 1000 tonnes a year.
And Toronto-listed SXR Uranium is expected to have its already permitted Honeymoon deposit in South Australia producing about 400 tonnes a year from 2008.
These alone would almost double Australia's production to more than 22,000 tonnes a year by 2013. Based on a long-term price of $US30 a pound and an Australian dollar at US65c, that would generate about $2.3billion in annual export revenue.
Ian Hore-Lacy, head of the Melbourne-based Uranium Information Centre that promotes the industry, estimates that China could be accounting for about 3000-4000 tonnes of our uranium exports a year by 2020.
While federal Resources Minister Ian Macfarlane has talked of China's uranium demand rising to about 20,000 tonnes a year by 2015, from 1300 tonnes currently, Mr Hore-Lacy estimates that China's import demand will be only half that by 2020, at 10,000 tonnes, of which Australia can hope to secure a third.
That would put a value on the Chinese deal at $300million to $400 million a year by 2020.
(20min delay)