re: rpt up on wa resignation new uranium policy Let's reflect...

re: rpt up on wa resignation new uranium policy Let's reflect back a interesting read below!

Power struggle
Date: January 14 2006


Australia is home to nearly half the world's uranium, but politics has conspired to stymie an industry in the midst of a global boom, writes Jamie Freed.

At first glance, Australia's lack of a nuclear power industry might seem curious to foreigners when they learn that Australia has more uranium than any other country.

This is explained away easily, as Australia has large reserves of other energy sources such as coal and natural gas, and a relatively small population. But another fact is more puzzling: despite Australia's large trade deficit, it mines a relatively small proportion of its uranium reserves, meaning it isn't milking the export market as much as it could.

It's not due to lack of interest from mining companies, which tend to view Australia as a dream destination because of its stable political system, skilled workforce and abundance of natural resources. Rather, restrictive government policy at the federal and state level has prevented most of the country's uranium from being mined.

At the meeting of the Asia-Pacific Partnership for Clean Development and Climate in Sydney this week, the focus was on initiatives the six member countries could adopt to reduce greenhouse gases.

One of the topics at the forefront was nuclear power, as the United States, Japan, South Korea, India and China all operate nuclear plants and are planning to build more to help tackle the issue of climate change. Australia, never having built a nuclear power plant, was clearly the odd one out.

Under the federal Coalition Government, policy has already changed, but all state Labor premiers — with the exception of South Australia's Mike Rann — oppose mining, due in part to Labor's long history of anti-uranium sentiment.

This has forced local miners to look overseas for viable uranium projects. Take Perth's Paladin Resources. Instead of mining or even studying one of its major deposits in Western Australia, the company will start production at its Langer Heinrich project in Namibia this year. Next on its list is a uranium deposit in Malawi, one of the world's poorest and most corrupt nations.

Paladin managing director John Borshoff is quite upfront about why his company has chosen to develop projects overseas. The countries of southern Africa, he says, are "less politically hostile" than Australia.

WA Premier Geoff Gallop is adamant no uranium mining will be allowed in his state while he remains in office, and his current term lasts until 2009. "In terms of uranium mining, I'm the Premier," Dr Gallop said. "We took this policy to the election (last year). Our uranium will stay in the ground in Western Australia."

Despite Dr Gallop's firm stance, companies such as Redport are pinning their hopes on an eventual change in policy, or in government.

When Redport — a former gold explorer and internet company — first picked up the Lake Maitland uranium project in WA last April, the market reaction seemed almost inexplicable.

The company's business plan was to mine in WA and ship uranium off to nuclear power plants in China, despite both actions being illegal under state and federal regulations. Yet shares in the tiny explorer more than doubled on the day of the announcement.

Unless investors — including institutions such as Fidelity Investments, which holds 12.7 per cent of Redport — have suddenly become keen to sink money into a project going nowhere, it seems a paradigm shift is afoot on the prospect of mining uranium in Australia.

Industry veteran Tony Grey, the founder of now-defunct Pancontinental Mining, says: "Australia is still in irons as far as uranium development is concerned."

Mr Grey should know. His company discovered the giant Jabiluka deposit in the Northern Territory in 1971 and it still hasn't been developed. "Having said that," he adds, "the winds of change are blowing."

While it's difficult to discern whether public attitudes have changed, among some Labor figures the hostility to uranium mining is beginning to ebb. Labor's federal industry and resources spokesman, Martin Ferguson, is encouraging a widespread debate within his party about the merits of uranium mining, and supports exporting the radioactive metal to China as long as it is used for peaceful purposes.

Redport chairman Richard Homsany believed change was coming when his company invested in Lake Maitland. "I think at the moment there is enormous pressure to reexamine that (WA) policy on uranium mining," he said last April. "One cannot ignore the fact it is a clean fuel."

Clean fuel or not, Australia has never built a nuclear power plant, despite being home to 41 per cent of the world's known economic uranium reserves and the world's biggest uranium mine, BHP Billiton's Olympic Dam.

For all of coal's environmental ills, Australia's plentiful supply of the fossil fuel will last the nation hundreds of years.

Coal is the reason there is a ban on uranium mining in Queensland. State Premier Peter Beattie believes exporting uranium would undermine its lucrative coal industry. "There are countries which have to choose between sources for their power stations," says Beattie's spokesman, citing Italy as an example. "He (Beattie) is not going to encourage the nuclear industry."

And aside from coal, there are other energy options for Australia. Power stations fuelled by natural gas are a possibility, based on large reserves of coalseam gas and natural gas in Australia and Papua New Guinea, although much of Australia's gas is sold at high prices for export.

Queensland is building coalseam gas power stations to meet environmental targets.

Although nuclear energy has lower emissions than coal or even natural gas, the costs of building a nuclear power plant are daunting by comparison.

An International Energy Agency report found the cost per kilowatt of building a modern nuclear reactor would be $US2000 ($A2700), compared with $US1200 for coal and $US500 for gas. But over the long lifetime of a nuclear power station, the capital costs would be recouped, making it a viable, low-emission alternative.

While some environmental activists press for the use of renewable energy sources such as wind, water and solar power, these are not effective generators of base-load power, though they can help meet some energy needs.

Anti-nuclear activists add that a nuclear plant malfunction such as Three Mile Island or Chernobyl is far more damaging on a safety and environmental level than a malfunction in a coal or gas-fired plant.

Nuclear weapons proliferation is another major issue. Australia does not allow the sale of uranium for weapons purposes, and proponents of uranium mining argue that strict international safeguards are effective, but WA's Dr Gallop disagrees.

"The last time there was a major expansion of the nuclear industry there was a proliferation of nuclear weapons, and I have no reason to think the same thing wouldn't happen again," the Premier says. "Added to that, you have the new terrorist threats."

Radioactive waste disposal is another problem, and a daunting one for WA voters. In 1998, US company Pangea Resources' plan to build a nuclear waste dump in WA came to public notice after a British environmental group aired a corporate video touting the project.

After widespread opposition, the WA Parliament passed a bill that made it illegal to dispose of radioactive waste in the state without specific approval. But Dr Gallop worries that if he allows uranium mining, his state will become "part of the nuclear fuel cycle" and will be obliged to accept waste.

Australia's opposition to domestic nuclear power plants and its lack of nuclear weapons means that the uranium mining industry is underdeveloped.

"Uranium was a proxy for nuclear," Pancontinental founder Tony Grey says. "For those who don't like nuclear power, they can say they want to prohibit the mining of uranium."

When Bob Hawke was elected prime minister in 1983, the Labor Party soon instituted its Three Mines policy, restricting uranium mining to the Northern Territory's Ranger, South Australia's Olympic Dam and Queensland's Nabarlek, a mine that has since been depleted.

The Labor Party had little choice to allow mining at Nabarlek and Ranger, as both were already in operation and Australia's good name as a reliable exporter would have been smeared if they were suddenly closed down.

The case of Olympic Dam was trickier, as it was not in operation in 1983. But at the gigantic open cut mine, uranium is actually mined as part of the huge copper deposit.

Copper brings in about 75 per cent of revenue, compared with 20 per cent for uranium and 5 per cent for gold.

South Australia Labor leader John Bannon wanted the jobs and royalty revenue the huge mine would create, needing them to help him get elected as premier in 1982.

Federal Labor had to agree to include Olympic Dam in the Three Mines policy, although mining did not begin until 1988. But Pancontinental's plan to develop the Jabiluka deposit was thwarted.

The Howard Government overturned the Three Mines policy after taking power in 1996, but only one more mine has opened since: the Beverley mine in South Australia, owned by US company General Atomics. But the continuing ban on mining uranium in WA, Queensland, NSW, Victoria and, until recently, the Northern Territory is only one of many factors surrounding the uranium issue.

Energy Resources of Australia, which operates the Ranger mine, has been stopped from developing the nearby Jabiluka deposit due to issues with Aboriginal landowners. ERA bought the Jabiluka deposit from Pancontinental for $125 million in 1991.

Even though the Federal Government declared the Northern Territory "open for business" for uranium mining last year, it remains a tricky operating environment.

"The most prospective area (for uranium), perhaps in the world, is in the Northern Territory," Mr Grey says. "But that's bedevilled with Aboriginal issues."

The Mirarr people, native title holders to the Jabiluka ground, argue that mining's social and economic impacts would change their way of life. ERA and the Mirarr people agreed last February to place the Jabiluka site on long-term care and maintenance, and ERA will not develop it without consent from the indigenous group.

Aside from the political issues, however, perhaps the biggest hindrance to the development of Australia's uranium industry has been the price of the commodity.

At the end of the Cold War, decommissioned Soviet nuclear weapons became a cheap source of fuel for nuclear reactors, which depressed the price. By November 2000, the spot price of uranium was just $US7.10 a pound.

But the old Soviet supply has since run out and, at the end of last month, the uranium price had gone up five times to $US36.25 a pound due to higher demand and a lack of supply.

Australia's next uranium mine looks set to come from a Canadian company, SXR Uranium One, which has already received approvals from the South Australian Government.

While Canada has much less uranium than Australia, it is the world's biggest producer of yellowcake and its capital markets are much friendlier towards uranium companies.

Canada receives more than 12 per cent of its energy from nuclear power and its CANDU reactor design has been sold around the world.

"The truncation of the Australian development of uranium has had worldwide repercussions," says Mr Grey, who was born in Canada.

"We sort of stood aside in order to allow the Canadian uranium to develop."

With increased prices, along with the Government setting the stage for allowing exports to China's booming nuclear power plant industry, projects not looked at since the 1970s have suddenly become attractive for junior exploration companies. "Exploration activity now for uranium is probably at the highest level it's been for 20 to 25 years," says Fat Prophets' resources analyst Gavin Wendt.

Malcolm Mason, who discovered Paladin's Langer Heinrich uranium project in Namibia, serves as a strategic adviser for Redport. It is one of the few Australian explorers to have someone with uranium experience on board.

Redport marks Mr Mason's second attempt to develop the Lake Maitland deposit. He floated Acclaim Uranium in 1997 on the back of Lake Maitland, but now admits the timing was "dreadful" due to the declining uranium price.

"The thing that fooled me was the huge amount of nuclear weapons around," he says.

Mr Mason returned from retirement to take part in the most recent uranium boom. "The world is so short of energy," he says.

"You go talk to the Chinese and they are so desperate for energy it's ridiculous."