![]() ![]() ![]() ![]() ![]() ![]() |
|||
![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() |
|||
![]() |
|
|
Print Chapter 9 (PDF 180KB) | < - Report Home < - Chapter 8 : Chapter 10 - > |
There is an overwhelming case for acknowledging the strategic value of Australian’s uranium resources by overturning outmoded antagonistic attitudes to nuclear power and permitting development of resources in accordance with global market demand.1
Key messages
Introduction
Energy exports
Energy security
Global energy imbalance
Economic benefits derived from Australia’s uranium industry
Employment
Regional development and infrastructure
Export income
Benefits for Aboriginal communities
Royalties, taxes and fees paid to governments
Proposed expansion of Olympic Dam
Valhalla, Skal and Andersons
Economic significance of Australia’s undeveloped uranium resources
Other countries will supply if Australia chooses not to
Australia’s place in the international fuel cycle
Conclusions
![]() |
||||||||||||||||||||||||||||
Key messages — |
||||||||||||||||||||||||||||
Uranium is Australia’s second largest energy export in terms of contained energy content.
|
||||||||||||||||||||||||||||
![]() |
||||||||||||||||||||||||||||
Introduction |
||||||||||||||||||||||||||||
9.1 | In addition to its greenhouse gas emission benefits, which were discussed in chapter four, evidence presented to the Committee suggested that the strategic importance of Australia’s uranium resources derives from the:
|
|||||||||||||||||||||||||||
![]() |
||||||||||||||||||||||||||||
Energy exports |
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
9.2 | The strategic importance of Australia’s uranium resources derives primarily from its role as one of the nation’s major energy exports, particularly given predictions that the world’s energy needs will increase by 1.7 per cent annually and double in the period to 2050.3 Moreover, as described in chapter two, the global demand for electricity is forecast by the International Energy Agency (IEA) to grow at an annual rate of 2.7 per cent to 2030, faster than overall energy demand, and is likely to be driven by the industrial modernisation of India and China.4 A quarter of the world’s projected increase in electricity production to 2030 is expected to occur in China.5 The role of Australia’s uranium as a significant energy export was recognised in the Australian Government’s energy white paper, Securing Australia’s Energy Future, published in 2004.6 |
|||||||||||||||||||||||||||
9.3 | Uranium currently comprises just over 40 per cent of Australia’s total energy exports in terms of contained energy content—second only to black coal. In 2004–05, Australia’s uranium exports represented the energy equivalent of 5 287 petajoules, compared to 6 595 for coal, 555 for crude oil, 576 for liquid natural gas (LNG) and 73 for liquid petroleum gas.7 |
|||||||||||||||||||||||||||
9.4 | As noted in chapter four, uranium is an immensely concentrated source of energy: nuclear fuel from one tonne of uranium oxide (U3O8) can produce 40 000 megawatt-hours of electricity, containing the same amount of energy as 20 000 tonnes (t) of typical black coal, 80 000 barrels of oil or 13 million cubic metres of gas.8 Each kilogram of U3O8 produces 500 000 megajoules (MJ) of heat in a conventional reactor, compared with 39 MJ for gas, 45 MJ for oil and 10-30 MJ for coal—that is, uranium contains some 10 000 times more energy per kilogram of fuel than traditional fossil fuel sources .9 |
|||||||||||||||||||||||||||
9.5 | The energy benefits of the uranium produced from the three existing Australian uranium mines are demonstrated by the following:
|
|||||||||||||||||||||||||||
9.6 | Summit Resources proposes to produce some nine million pounds of U3O8 per year from its Mt Isa deposits and this would be sufficient to supply ten, 2 000 megawatt power stations—equivalent to replacing 76 million tonnes black coal (which would produce 160 million t of greenhouse gases).14 |
|||||||||||||||||||||||||||
9.7 | The International Ministerial Conference, Nuclear Power for the 21 st Century, held in March 2005, affirmed the strategic importance of nuclear energy in meeting growing energy needs in an environmentally responsible manner.15 |
|||||||||||||||||||||||||||
9.8 | As discussed in chapter two, nuclear power currently supplies 16 per cent of the world’s electricity and nuclear capacity is expected to increase. However, the International Energy Agency (IEA) predicts that the share of nuclear power in total electricity generation will decline in the medium to longer term (to 12 per cent by 2030).16 This prediction is based on a scenario in which existing plants will close on schedule, and that no new plants are built beyond those already under construction or firmly planned. In contrast, the International Atomic Energy Agency (IAEA) has published a forecast in which nuclear power generation increases 2.5 times by 2030 to account for 27 per cent of world electricity generation, and for nuclear power output to quadruple by 2050.17 |
|||||||||||||||||||||||||||
9.9 | It was argued that regardless of the forecast for nuclear power adopted, uranium remains one of the nation’s most important and strategic energy and export assets, particularly given that Australia holds a significant share of the market in regions where nuclear power is expanding, notably North Asia. For example, China plans to more than quadruple its nuclear power capacity to 40 gigawatts electrical (GWe) (to four per cent of total projected electricity demand) by 2020.18 |
|||||||||||||||||||||||||||
9.10 | In relation to exports of uranium to China, Cameco noted that the Canadian Government has already negotiated a bilateral agreement for sales of uranium to China and has also exported nuclear reactor technology to that country. Similarly, the US Government has permitted Westinghouse and General Electric to sell their reactor technology to China.19 |
|||||||||||||||||||||||||||
9.11 | The Australian Nuclear Association (ANA) argued that the size of Australia’s uranium resources means that:
|
|||||||||||||||||||||||||||
9.12 | As described in chapter three, should the proposed expansion of Olympic Dam proceed, this would double Australia’s current national uranium production.21 Olympic Dam would also become the world’s largest producer, accounting for over 20 per cent of total world uranium production.22 |
|||||||||||||||||||||||||||
![]() |
||||||||||||||||||||||||||||
Energy security |
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
9.13 | Secure energy supplies are vitally important, both for industrialised and developing countries. As discussed in chapter four, nuclear power has relatively low operating and fuel costs. These costs are controllable. The price of the electricity produced is relatively insensitive to fluctuations in the uranium price. These features mean that:
|
|||||||||||||||||||||||||||
9.14 | Mr Jerry Grandey, President of Cameco Corporation, also pointed to the energy security benefits of uranium in an environment where fossil fuel prices are rising and where oil is largely sourced from unstable regions of the world:
|
|||||||||||||||||||||||||||
9.15 | Australia’s potential contribution to maintaining a secure supply of energy is related to its geographical location and political stability. As noted by the UIC, vast resources of traditional fossil fuels (more than 60 percent of the world’s oil and 40 per cent of its gas) are concentrated in the Middle East—a region where ‘historically, political instability has translated into very volatile prices.’26 The MCA concurred with this view, noting that geopolitical tensions have contributed to significant rises in fossil fuel prices, ultimately increasing the price of electricity:
|
|||||||||||||||||||||||||||
9.16 | In contrast, uranium is plentiful in many regions around the world (notably, North America, Europe, Africa and the Asia-Pacific) and that, therefore, ‘in the event of interruption to production in one region, the impact on the entire market would be much less severe than for oil or gas.’28 |
|||||||||||||||||||||||||||
9.17 | DEH also noted that countries expanding the use of nuclear power are doing so ‘generally, for reasons wider than greenhouse gases. It is generally to do with having a secure energy supply and having a wide variety of supplies to protect energy security.’29 |
|||||||||||||||||||||||||||
9.18 | The MCA noted that energy demand will grow as China and India continue to develop.30 It was suggested that the demand for Australian uranium would intensify, as China and India increasingly look to uranium to provide a secure source of energy.31 |
|||||||||||||||||||||||||||
9.19 | Australia, by virtue of its abundant uranium resources, could therefore make a significant contribution to the security of global energy supplies by being a reliable, long-term uranium supplier.32 |
|||||||||||||||||||||||||||
![]() |
||||||||||||||||||||||||||||
Global energy imbalance |
||||||||||||||||||||||||||||
9.20 | A number of submitters highlighted, with concern, the global energy imbalance. For instance, Arafura Resources noted that:
|
|||||||||||||||||||||||||||
9.21 | Information published by the IEA states that 1.6 billion people worldwide currently have no access to electricity and the demand for electricity from developing countries is expected to more than triple by 2030.34 |
|||||||||||||||||||||||||||
9.22 | The Director General of the IAEA, Dr Mohamed ElBaradei, has noted the importance of nuclear energy in correcting the imbalance of energy availability between developed and developing countries:
|
|||||||||||||||||||||||||||
9.23 | The Uniting Church (Synod of Victoria and Tasmania) submitted that there is a need to re-examine ‘the glaring differences in the use of energy in the wealthier and poorer parts of the world.’36 Notwithstanding this concern, the Uniting Church did not accept that nuclear energy is necessarily the solution to the global energy imbalance.37 |
|||||||||||||||||||||||||||
9.24 | The MCA observed that Australia is endowed with ‘significant, diverse and high quality energy resources’.38 Australia’s own energy needs are well catered for as the country possesses ‘some 800 years supply of lignite in Victoria, some 290 years supply of black coal in Queensland and NSW and large natural gas resources.’39 Other countries, however, are not so fortunate and must import fuel to meet their electricity generation requirements. Among these are developing Asian countries, notably China.40 |
|||||||||||||||||||||||||||
9.25 | Evidence presented to the Committee stated that China intends to meet at least part of its growing demand for energy through a significant expansion of the use of nuclear power. As noted above, China is planning a fivefold increase in nuclear capacity to 40 GWe by 2020. The expansion will require the construction of two nuclear power plants every year over the period. 41 India is currently constructing eight nuclear power plants and intends to triple nuclear generating capacity to 20 GWe by 2020. India intends that by 2050 nuclear power will contribute 25 per cent of the country’s electricity—a hundredfold increase on 2002 nuclear generating capacity. 42 |
|||||||||||||||||||||||||||
9.26 | Arafura Resources argued that the global energy imbalance has meant that:
|
|||||||||||||||||||||||||||
9.27 | Similarly, Mr Andrew Parker submitted that ‘ Australia should ensure that enough uranium and thorium is available to our regional trading partners who are not well endowed with either oil or uranium reserves.’44 |
|||||||||||||||||||||||||||
![]() |
||||||||||||||||||||||||||||
Economic benefits derived from Australia’s uranium industry |
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
9.28 | The strategic importance of Australia’s uranium resources lies partly in the extent to which they can generate economic benefits. Uranium exploration and mining in Australia has produced the following economic benefits:
|
|||||||||||||||||||||||||||
9.29 | Southern Gold predicted that further expansion of the industry would result in numerous economic benefits:
|
|||||||||||||||||||||||||||
![]() |
||||||||||||||||||||||||||||
Employment |
||||||||||||||||||||||||||||
9.30 | Heathgate Resources noted that although the company is the smallest and the newest uranium producer in Australia, it directly employs 100 people and, together with those indirectly employed, a total of almost 300 people—almost all of whom are located in regional Australia.47 The company expressed pride in the fact that it is the largest private employer of Aboriginal people from the Flinders Ranges, with approximately 25 per cent of the mine site workforce drawn from this area.48 |
|||||||||||||||||||||||||||
9.31 | ERA is also a significant employer in the Northern Territory (NT), with an annual payroll of $45 million:
|
|||||||||||||||||||||||||||
9.32 | Olympic Dam in South Australia currently employs some 1 750 people at the mine site, with a further 6 240 jobs indirectly generated by the mine across the State.50 |
|||||||||||||||||||||||||||
9.33 | Nova Energy estimated that $1 million of uranium industry expenditure generates 13 full time equivalent (FTE) jobs in Australia.51 It assessed that uranium mining in Western Australia (WA), if permitted, would generate 20 800 FTE positions nationally.52 |
|||||||||||||||||||||||||||
![]() |
||||||||||||||||||||||||||||
Regional development and infrastructure |
||||||||||||||||||||||||||||
9.34 | The Director of National Parks, Mr Peter Cochrane, noted that the Ranger mine generates a range of benefits for the people living in the region and is extremely important for the viability of the Jabiru township
|
|||||||||||||||||||||||||||
9.35 | Moreover, Mr Cochrane argued that if the mine were to close the costs to maintain the town, including electricity generation, would then have to be borne by government:
|
|||||||||||||||||||||||||||
9.36 | ERA credits its work in Jabiru as galvanising:
|
|||||||||||||||||||||||||||
9.37 | In addition to the infrastructure and services that support the mine and the Jabiru township, such as roads and the construction of the power plant, Mr Harry Kenyon-Slaney noted that ERA is also involved in supporting a range of social programs with the local community.56 |
|||||||||||||||||||||||||||
9.38 | Areva detailed the economic benefits of the uranium industry for regional areas:
|
|||||||||||||||||||||||||||
9.39 | The Northern Territory Minerals Council (NTMC) cited a study entitled the Contribution of the Ranger uranium mine to the Northern Territory and Australian economies , which found that the Ranger mine and directly related activities accounted for seven per cent of the Territory’s economic activity between 1981–82 and 1991–92, some $5.3 billion in 1991–92 terms. The NTMC asked the Committee to:
|
|||||||||||||||||||||||||||
9.40 | Eaglefield Holdings, owners of the Mulga Rock deposit (MRD) in the eastern regions of the WA goldfields, pointed out that uranium deposits, particularly in WA, tend to be located away from existing mining areas.59 Development of uranium deposits could therefore have regional benefits and support the development of other resource projects:
|
|||||||||||||||||||||||||||
![]() |
||||||||||||||||||||||||||||
Export income |
||||||||||||||||||||||||||||
9.41 | The Association of Mining and Exploration Companies (AMEC) argued that uranium mining makes a significant contribution to the nation’s finances by generating export income:
|
|||||||||||||||||||||||||||
9.42 | The UIC noted that in 2004–05 uranium exports were worth A$475 million. Over the five years to mid 2005, Australia exported 46 600 tonnes of uranium oxide with a value of over $2.1 billion to eleven countries around the world.62 |
|||||||||||||||||||||||||||
9.43 | Arafura Resources highlighted the dramatic increase in uranium export revenue over recent years:
|
|||||||||||||||||||||||||||
9.44 | Eaglefield Holdings also suggested that uranium mining in WA could also increase exports of LNG and other commodities.64 The major export markets for uranium are also major or emerging markets for LNG, a commodity in which Australia has a smaller competitive advantage. Eaglefield suggested that sales of uranium to such markets could be made contingent on purchases of LNG and other commodities.65 |
|||||||||||||||||||||||||||
9.45 | Eaglefield Holdings claimed that uranium mining in WA could deliver economic benefits through the establishment of related industries. It submitted that the production of uranium from the MRD would create industries for the production of related commodities, such as scandium and synthetic oil.66 |
|||||||||||||||||||||||||||
9.46 | A number of submitters highlighted the potential contribution of uranium mining to the Australian economy, particularly in relation to the national balance of payments.67 The UIC noted the importance of uranium exports for the national economy, particularly through foreign investment and in the event of a downturn in demand for coal and other fossil fuel exports:
|
|||||||||||||||||||||||||||
9.47 | Paladin Resources argued that the uranium and coal industries are complementary:
|
|||||||||||||||||||||||||||
![]() |
||||||||||||||||||||||||||||
Benefits for Aboriginal communities |
||||||||||||||||||||||||||||
9.48 | Southern Gold predicted that an expanded uranium industry would have benefits for Aboriginal groups and regional Australia, through the creation of employment, provision of royalties and establishment of new infrastructure.71 |
|||||||||||||||||||||||||||
9.49 | ERA pays 4.25 per cent of net sales via the Commonwealth to the Aboriginal Benefits Trust Account for distribution to the Aboriginal owners. In addition, ERA pays 1.25 per cent of net sales via the Commonwealth to the NT to cover the costs of administration.72 During 2005, ERA paid $10.2 million in royalties from the Ranger operation to the Australian Government, with these funds ultimately distributed to the Traditional Owners, the Mirrar Gundjeihmi people. 73 |
|||||||||||||||||||||||||||
9.50 | Heathgate Resources pays over $1 million per year in native title royalties to the Indigenous community. In addition to the royalty payments, Heathgate also argued that the establishment of the Beverley uranium mine has delivered employment benefits to the Adnyamathanha and Kuyani people, traditional claimants to the land, with Aboriginal persons from the local area comprising 25 per cent of Beverley’s workforce. The company also makes community and administration payments.74 |
|||||||||||||||||||||||||||
9.51 | As the Northern Land Council (NLC) explained, sections 63 and 64 of the Aboriginal Land Rights (Northern Territory) Act 1976 (ALRA) provide that amounts equal to mining royalties received by the Commonwealth or the NT governments from mining on Aboriginal land must be paid into the Aboriginal Benefits Account (ABA), with amounts received by the ABA distributed as follows:
|
|||||||||||||||||||||||||||
9.52 | In the case of royalties from the Ranger operation, the NLC forwards payments to the Gundjeihmi Aboriginal Corporation (GAC). Thus, for royalties paid by ERA in 2005, the Traditional Owners were entitled to receive approximately $3.06 million. |
|||||||||||||||||||||||||||
9.53 | However, the NLC argued that royalties are not substantial and are spread thinly. To increase the returns to Aboriginal people, it was argued repeatedly that land councils should be empowered under the ALRA to enter into commercial mining agreements with mining companies:
|
|||||||||||||||||||||||||||
![]() |
||||||||||||||||||||||||||||
Royalties, taxes and fees paid to governments |
||||||||||||||||||||||||||||
9.54 | The uranium industry generates revenue for the government through the payment of various taxes and fees. As AMEC noted:
|
|||||||||||||||||||||||||||
9.55 | ERA stated that, in nominal terms, the company has paid more than $700 million in income taxes since the project commenced in 1980. During that period, the Ranger mine has paid a total of $220.9 million in nominal terms in royalties, which are levied at 5.5 per cent of sales revenue. In 2005, ERA paid $2.9 million in royalties to the Australian Government for distribution to the NT Government.79 |
|||||||||||||||||||||||||||
9.56 | Heathgate Resources stated that the Beverley uranium mine contributed some $50 million per annum to state economies, through the payment of royalties, taxes, wages and payments to suppliers.80 |
|||||||||||||||||||||||||||
9.57 | Eaglefield Holdings suggested that uranium mining royalties and other taxes paid to state governments reduce the taxation burden on the community.81 It estimated that, in the event that uranium mining is permitted in WA, uranium mining could potentially deliver $30 million per annum, in royalties alone, to the state government.82 |
|||||||||||||||||||||||||||
![]() |
||||||||||||||||||||||||||||
Proposed expansion of Olympic Dam |
||||||||||||||||||||||||||||
9.58 | Chapter three described the proposed expansion of the Olympic Dam copper-uranium mine. The expansion will involve an investment of up to US$5 billion. During the four-year execution phase, the company will employ an average of 5 000 construction workers, with peaks of up to double this number. The expanded mine may require the construction of significant additional infrastructure, including a possible rail line from Pimba to the mine, a desalination plant and gas pipe lines from Moomba to Olympic Dam.83 |
|||||||||||||||||||||||||||
9.59 | A study commissioned by the mine’s former owners, WMC Resources, estimated the economic impact the proposed expansion would have on the SA economy. At present, it is estimated that there are some 6 240 jobs associated with Olympic Dam throughout the State and 1 750 directly employed at the mine. With the expansion, direct employment would increase to 3 250, with 14 660 associated jobs in SA. Table 9.1 summarises the economic impact of the proposed expansion. Table 9.1 Economic benefits of Olympic Dam and the proposed expansion
Source The South Australian Centre for Economic Studies (SACES), The Gross Economic Impact of the Proposed Expansion of Olympic Dam on the South Australian Economy , SACES, Adelaide, 2005; Michael Nossal, Olympic Dam Development Study , WMC Resources, Melbourne, 2004, p. 10; BHP Billiton, Exhibit no. 56, Olympic Dam Development Pre-feasibility Study , p. 18. Figures in Australian dollars. |
|||||||||||||||||||||||||||
9.60 | The aggregate impact of the expanded mine on gross state product (GSP) would be of the order of three per cent of South Australia’s GSP. Production from the mine would account for approximately 15 per cent of the State’s overseas exports:
|
|||||||||||||||||||||||||||
9.61 | In addition to these benefits, the expanded mine would generate up to three times the current sales revenue (up to A$3.2 billion annually), double the current royalty payments (to $80 million). Payroll tax would also rise significantly.85 | |||||||||||||||||||||||||||
![]() |
||||||||||||||||||||||||||||
Valhalla, Skal and Andersons |
||||||||||||||||||||||||||||
9.62 | Summit Resources, which owns uranium deposits in Queensland that it is currently prevented from developing, is another example of the potential significance of uranium mines to regional economies. Once a mining lease is granted, Summit Resources intends to initially produce six million pounds of U3O8 per year (2 750 t). This will make it Australia’s third largest uranium mine. After three years, the company proposes to scale up production to nine million pounds (4 000 t) per year. The mine life will initially be 10 years (based on current measured and indicated resources), but there is potential for this to be extended to over 20 years.86 |
|||||||||||||||||||||||||||
9.63 | The company has estimated that it will outlay $400 million in capital expenditure in the district of the mine and spend another $600 million in operating costs, largely on wages and contractors in the district. Export revenues would be $2.5 billion over six years. The company will employ some 600 people in the initial mining and construction phase and about 400 to 500 full time employees on an on-going basis. In addition, Summit will generate royalties in the order of $55 million over six years as well as taxation revenues.87 |
|||||||||||||||||||||||||||
![]() |
||||||||||||||||||||||||||||
Economic significance of Australia’s undeveloped uranium resources |
||||||||||||||||||||||||||||
9.64 | Evidence to the Committee emphasised the value of Australia’s undeveloped uranium resources. Eaglefield Holdings stated that:
|
|||||||||||||||||||||||||||
9.65 | Areva provided an estimate of the value of the major undeveloped uranium resources in each state, which are listed in table 9.2. Areva estimated the possible revenues that might be earned from the resources at over A$19 billion. However, this amount is likely to significantly underestimate the current value of the resources because the estimates were made assuming a U3O8 price of US$26 per pound, while the spot price has now risen to US$43 per pound.89 Table 9.2 Possible revenues from uranium sales for the most significant undeveloped resources in Australia
Source Areva , Submission no. 39, p. 15. |
|||||||||||||||||||||||||||
9.66 | Similarly, the NTMC estimated current in-ground uranium reserves in the NT at 300 000 t U3O8 .90 This equates to an estimated value of some $12 billion, based on a U3O8 spot price as at October 2005 of US$30 per pound. However, Dr Ron Matthews argued that ‘there is potential to double or treble that, or perhaps even more.’91 |
|||||||||||||||||||||||||||
9.67 | Recalculating the potential revenues based on the current spot price significantly increases the value of the uranium resources. For example, total uranium reserves at Jabiluka in the NT are 163 000 t U3O8.92 At the current spot market price, the in-ground value of these reserves is approximately US$15.4 billion (A$20.6 billion).93 |
|||||||||||||||||||||||||||
9.68 | Summit Resources estimated the in-ground value of it uranium resources near Mt Isa in Queensland at over A$3 billion at prices prevailing in November 2005.94 Summit argued emphatically that:
|
|||||||||||||||||||||||||||
9.69 | In terms of the value of uranium resources currently ‘locked up’ in WA due to mining restrictions, Nova Energy estimated that the total reserves and resources in key, known uranium deposits in the state is over |
|||||||||||||||||||||||||||
9.70 | It was estimated that, based on a long-term export sales price for U3O8 of US$25 per pound, WA deposits would generate sales revenue of US$1.2 billion per year (A$1.6 billion). Moreover, Nova Energy estimated that a further A$1.5 billion would be added annually throughout the state and the nation due to multiplier effects. Assuming the equivalent royalty to production ratio for key deposits in WA as exist for the Ranger mine in the NT, would result in royalties of A$42 million per year.97 |
|||||||||||||||||||||||||||
9.71 | Summit Resources estimated that the total in-ground value of known uranium resources unable to be produced nationwide due to mining restrictions is $32 billion, based on November 2005 prices.98 Again, given the substantial increase in uranium price in the months since then, this figure is likely to significantly underestimate the in-situ value of the resource. |
|||||||||||||||||||||||||||
9.72 | MCA argued that restrictions on resource development now involve a higher opportunity cost because the price of uranium has trebled since 2003. |
|||||||||||||||||||||||||||
![]() |
||||||||||||||||||||||||||||
Other countries will supply if Australia chooses not to |
||||||||||||||||||||||||||||
9.73 | A number of submitters suggested that Australia’s willingness to export uranium has negligible impact on international nuclear programs, as Australian uranium could easily be replaced by supplies from other countries.99 Compass Resources, for example, argued that Australian uranium would be of strategic importance if it is developed, but that if development is constrained, ‘marginally higher cost overseas resources will meet the demand.’100 |
|||||||||||||||||||||||||||
9.74 | Compass Resources noted that while expanding Australia’s uranium exports offers economic benefits to Australia and benefits to the world in terms of safeguarded uranium mined in a best practice manner, other countries will supply if Australia fails to do so:
|
|||||||||||||||||||||||||||
9.75 | Similarly, Mr Keith Alder, formerly the General Manager of the Australian Atomic Energy Commission, argued that the significance of Australia’s uranium resources in the global context was negligible:
|
|||||||||||||||||||||||||||
9.76 | The UIC concurred, noting that:
|
|||||||||||||||||||||||||||
9.77 | The ANF argued that if Australia were to cease exporting uranium the world’s nuclear programs would continue:
|
|||||||||||||||||||||||||||
9.78 | The ANF argued that, instead, ‘Australian uranium exports should be governed primarily by market forces, but consistent with non-proliferation constraints.’105 |
|||||||||||||||||||||||||||
![]() |
||||||||||||||||||||||||||||
Australia’s place in the international fuel cycle |
||||||||||||||||||||||||||||
9.79 | A number of submitters emphasised Australia’s role in establishing a safe, international nuclear energy industry.106 Their submissions suggested that, by virtue of its significant uranium reserves and growing global demand, Australia is in a position to impose strict conditions on the sale of uranium. Such conditions include comprehensive occupational health and safety and environmental regulations, as well as precautions for the safe use of uranium.107 The UIC argued that:
|
|||||||||||||||||||||||||||
9.80 | The Director General of ASNO, Mr John Carlson, argued that because Australia possesses some 30 per cent of the world’s uranium resources recoverable at medium-level cost and is a major exporter means that Australia occupies a significant place in the international fuel cycle and is therefore well placed to pursue non-proliferation objectives:
|
|||||||||||||||||||||||||||
9.81 | Nova Energy stated that Australian uranium is produced within a demanding regulatory regime and is exported under stringent safeguards, enabling the IAEA to track the material throughout its entire life cycle.110 This, it suggested, was in contrast with conditions placed upon supplies of uranium from developing countries in Asia and Africa.111 Nova Energy argued that ‘the greater the percentage of uranium produced in Australia, the greater the degree of control on its usage.’112 |
|||||||||||||||||||||||||||
9.82 | However, Mr Keith Alder noted the prominent position in international nuclear policy that Australia enjoyed in the past, and contrasted this with the minor role it now plays.113 Mr Alder argued that this transformation was due to Australia losing its ‘former expertise relating to power reactors and the nuclear fuel cycle … as a result of changes in Government policy’ and observed that ‘ Australia’s only claim to importance in nuclear matters now arises from possession of major uranium resources’.114 |
|||||||||||||||||||||||||||
9.83 | A number of submitters argued that it is not appropriate for Australia to export uranium to North Asia, given the geopolitical tensions in that region.115 Indeed, People for Nuclear Disarmament opposed such exports of uranium, claiming that ‘ North Asia is a nuclear disaster waiting to happen.’116 |
|||||||||||||||||||||||||||
9.84 | Friends of the Earth (FOE) expressed concern about stockpiles of Australian-obligated nuclear material in Japan potentially being diverted to a systematic nuclear weapons program.117 Even in the absence of such a program, FOE suggested that these stockpiles exacerbate tensions in the region.118 It argued that:
|
|||||||||||||||||||||||||||
9.85 | The Medical Association for the Prevention of War (MAPW) contended that any expansion of the Australian uranium industry was ‘indefensible’, arguing that:
|
|||||||||||||||||||||||||||
![]() |
||||||||||||||||||||||||||||
Conclusions |
||||||||||||||||||||||||||||
9.86 | Uranium is Australia’s second largest energy export in thermal terms, which is of great importance given predictions for an increase in energy demand over the coming decades, particularly in developing countries. |
|||||||||||||||||||||||||||
9.87 | The Committee concludes that nuclear power represents a significant means of addressing the global energy imbalance. It is an important component of the global energy mix, which can provide developing countries with access to the energy required to fuel their industrialisation and particularly their electricity requirements. |
|||||||||||||||||||||||||||
9.88 | Uranium production currently generates considerable economic benefits and has the potential to make such contributions in states that currently prohibit uranium mining. In recognising the economic benefits of the industry, the Committee is conscious that failure to permit the development of the industry has corresponding costs. Such costs include loss of the industry’s current and potential contribution to the national and state economies, regional development, services and employment in Aboriginal communities and further promotion of Australia’s role in the international nuclear community. As pointed out by Jindalee Resources, the cost to Australia of limiting the development of the uranium industry is:
|
|||||||||||||||||||||||||||
9.89 | The Committee notes that while precise estimates of the value of undeveloped uranium resources varies, one conservative estimate suggests that the locked up uranium in Australia could earn revenues in excess of A$32 billion (at prices prevailing in November 2005). Sales of uranium from WA alone could generate revenues of A$1.6 billion per year. |
|||||||||||||||||||||||||||
9.90 | In summary, the Committee concurs with the view expressed by the UIC, which argued that Australia’s uranium resources provide an opportunity, ‘reflecting a happy coincidence of national self-interest and environmental altruism.’122 |
|||||||||||||||||||||||||||
9.91 | It was submitted that exports of uranium into North and East Asia may raise broader geopolitical issues, such as tensions between China, Japan, Taiwan and the Koreas. The Committee does not agree, however, that increased exports of uranium to these countries will necessarily or appreciably add to any regional tensions. |
|||||||||||||||||||||||||||
9.92 | Notwithstanding the potential benefits, the Committee was reminded in evidence of an observation made by the Slatyer report 22 years ago, that further expansion of the nuclear power industry will not be dependent on Australian uranium and will proceed irrespective of whether or not Australia supplies uranium.123 If Australia fails to supply then marginally higher cost overseas resources will be supplied to meet global demand, and these resources may not be provided to the market with the same safeguards and other regulatory requirements imposed on Australian exports. However, Australia can contribute to international energy security by being a reliable and stable supplier of uranium. |
|||||||||||||||||||||||||||
9.93 | In view of the strategic importance of Australia’s uranium resources, the potential benefits from the further development of these resources, and following consideration of the fuel cycle risks summarised in the previous four chapters, the Committee concludes that development of new uranium deposits should be permitted and encouraged. In the following chapter the Committee addresses the regulatory arrangements that govern the industry in Australia. |
1 | Paladin Resources Ltd, Submission no. 47, p. 5. Back |
2 | Mr John Reynolds, Submission no. 5, p. 3. Back |
3 | See for example: Submarine Institute of Australia , Submission no. 21, p. 4; UIC, Submission no. 12, p. 2. Back |
4 | Nova Energy Ltd, Submission no. 50, p. 1. Back |
5 | IEA, World Energy Outlook 2004, OECD/IEA, Paris , 2004, p. 193. Back |
6 | Energy Task Force, Securing Australia’s energy future, Commonwealth of Australia, Canberra, 2004, p. 46, viewed 30 May 2006, <http://www.dpmc.gov.au/publications/energy_future>. Back |
7 | K Donaldson, Australian energy consumption and production, 1974-75 to 2004-05, Australian Bureau of Agricultural and Resource Economics, Canberra, 2006, viewed 15 June 2006, <http://www.abareconomics.com/interactive/energy/index.html >. See also: Minerals Council of Australia (MCA), Submission no. 36, pp. 1, 8; John Reynolds , loc. cit.; Department of the Environment and Heritage (DEH), Submission no. 55, p. 5. Back |
8 | Mr Alan Eggers (Summit Resources Ltd), Transcript of Evidence, 3 November 2005 , p. 2; UIC, op. cit., p. 10; Paladin Resources Ltd, Submission no. 47, p. 4; AMP Capital Investors Sustainable Funds team (AMP CISFT), Exhibit no. 65, The nuclear fuel cycle position paper, p. 13. Areva estimated that half a tonne of enriched U3O8 would produce as much energy as would 50 000 t of coal: Areva, Submission no. 39, p. 7. Back |
9 | UIC, op. cit., pp. 3, 10; Professor Leslie Kemeny , Exhibit no. 43, Pseudo-science and lost opportunities, p. 54. Back |
10 | UIC, op. cit., pp. 2-3, 10-13. See also: UIC, World Energy Needs and Nuclear Power, UIC, Melbourne , July 2002, viewed 3 June 2005 , <www.uic.com.au/nip11.htm>. Back |
11 | Heathgate Resources Pty Ltd, Exhibit no. 57, Heathgate Resources Pty Ltd — Beverley Uranium Mine , p. 2. Back |
12 | Energy Resources of Australia Ltd (ERA), Exhibit no. 76, What is it really like to operate a large uranium mine in Australia ? , p. 4. Back |
13 | Paladin Resources Ltd, op. cit., p. 5; Mr John Carlson (ASNO), Transcript of Evidence, 10 October 2005 , p. 17. Back |
14 | Mr Alan Eggers , op. cit., p. 2. Back |
15 | The Honourable Alexander Downer MP , Submission no. 33, pp. 6–7. Back |
16 | Australian Bureau of Agricultural and Resource Economics (ABARE), Submission no. 14, p. 4. Back |
17 | MCA, op. cit., pp. 1, 8. Back |
18 | UIC, op. cit., p. 12. Back |
19 | Mr Jerry Grandey (Cameco Corporation), Transcript of Evidence, 11 August 2005 , p. 4. Back |
20 | Dr Clarence Hardy (ANA), Transcript of Evidence, 16 September 2005 , p. 52. Back |
21 | Mr Aden McKay (Geoscience Australia ), Transcript of Evidence, 5 September 2005 , p. 3. Back |
22 | BHP Billiton Ltd, Exhibit no. 78, Presentation by Dr Roger Higgins , p. 3. Back |
23 | Australian Science and Technology Council (ASTEC), Australia ’s role in the nuclear fuel cycle — A report to the Prime Minister , Australian Government Publishing Service, Canberra , 1984, p. 5. Commonly referred to as the ‘Slatyer report’, after the Chairman of the Council, Professor R O Slatyer . Back |
24 | Dr Ron Cameron (ANSTO), Transcript of Evidence, 13 October 2005, p. 9. Back |
25 | Mr Jerry Grandey, op. cit., p. 17. Back |
26 | UIC, op. cit., p. 9. See also Mr Ian Hore-Lacy , op. cit., p. 89. Back |
27 | MCA, op. cit., p. 3. Back |
28 | UIC, loc. cit. Back |
29 | Mr Barry Sterland (DEH), Transcript of Evidence, 10 October 2005, p. 14. Back |
30 | MCA, op. cit., p. 8. Back |
31 | ibid. Back |
32 | ASTEC, loc. cit. Back |
33 | Arafura Resources NL, Submission no. 22, p. 2. Back |
34 | IEA, loc. cit.; IEA, CO 2 Emissions from Fuel Combustion 1971–2003, IEA/OECD, Paris , 2005, p. xvii. Back |
35 | Dr Mohamed ElBaradei , Nuclear Power: Preparing for the Future, IAEA, Paris , 21 March 2005 , viewed 19 May 2006 , <http://www.iaea.org/NewsCenter/Statements/2005/ebsp2005n004.html>. Back |
36 | Uniting Church in Australia (Synod of Victoria and Tasmania), Submission no. 40, p. 6. Back |
37 | ibid. Back |
38 | MCA, op. cit., p. 10. Back |
39 | ibid. Back |
40 | ibid.; Mr Ian Hore-Lacy, op. cit., p. 89. Back |
41 | Mr Alan Eggers, op. cit., p. 1. Back |
42 | UIC, Nuclear Power in India and Pakistan , Nuclear Issues Briefing Paper No. 45, viewed 1 June 2006 , <http://www.uic.com.au/nip45.htm>. Back |
43 | Arafura Resources NL, op. cit., pp. 4–5. See also: Dr Mohamed ElBaradei , loc. cit. Back |
44 | Mr Andrew Parker, Submission no. 3, p. 3. Back |
45 | Arafura Resources NL, op. cit., p. 8. Back |
46 | Southern Gold Ltd, Submission no. 54, pp. 7–8. Back |
47 | Mr Mark Chalmers (Heathgate Resources), Transcript of Evidence, 19 August 2005 , p. 96; Heathgate Resources, loc. cit. Back |
48 | ibid. Back |
49 | Mr Harry Kenyon-Slaney (ERA), Transcript of Evidence, 24 October 2005, p. 46. Back |
50 | The South Australian Centre for Economic Studies (SACES), The Gross Economic Impact of the Proposed Expansion of Olympic Dam on the South Australian Economy , SACES, Adelaide , 2005, pp. i–ii. Back |
51 | Nova Energy Ltd, op. cit., p. 13. Back |
52 | ibid. See also: Eaglefield Holdings Pty Ltd, Submission no. 18, p. 5; Compass Resources NL, Submission no. 6, p. 4. Back |
53 | Mr Peter Cochrane (DEH), Transcript of Evidence, 10 October 2005, p. 8. Back |
54 | ERA, op. cit., p. 9. Back |
55 | Mr Harry Kenyon-Slaney, op. cit., p. 46. Back |
56 | ibid., p. 55; ERA, op. cit., p. 4. Back |
57 | Areva Group, op. cit., p. 15. Back |
58 | Ms Kezia Purick (NTMC), Transcript of Evidence, 24 October 2005, pp. 32–33. Back |
59 | Mr Michael Fewster (Eaglefield Holdings Pty Ltd), Transcript of Evidence, 23 September 2005 , p. 24. Back |
60 | ibid. See also: Eaglefield Holdings Pty Ltd, loc. cit., p. 5. Back |
61 | AMEC, Submission no. 20, p. 4. Back |
62 | UIC, Australia’s Uranium and Who Buys It, Nuclear Issues Briefing Paper No. 1, viewed 1 June 2006 , <http://www.uic.com.au/nip01.htm>. Back |
63 | Arafura Resources NL, op. cit., p. 7. Back |
64 | Eaglefield Holdings Pty Ltd, op. cit., p. 6. Back |
65 | ibid. Back |
66 | ibid., pp. 6–9. Back |
67 | See for example: UIC, op. cit., pp. 2, 12; Jindalee Resources Ltd, Submission no. 31, p. 4; AMEC, op. cit., p. 6; Summit Resources Ltd, Submission no. 15, pp. 7, 18, 36. Back |
68 | UIC, op. cit., p. 12. Back |
69 | Paladin Resources Ltd, op. cit., p. 4. Back |
70 | ibid., p. 5. Back |
71 | Mr Cedric Horn (Southern Gold Ltd), Transcript of Evidence, 19 August 2005, p. 13. Back |
72 | Geoscience Australia, Submission no. 42, p. 8. Back |
73 | Mr Harry Kenyon-Slaney, op. cit., pp. 46, 55; ERA, op. cit., p. 4. ERA, 2005 Annual Report, p. 18. viewed 27 June 2006 , < http://www.energyres.com.au/corporate/era-ar-2005.pdf>. See also: Nova Energy Ltd, op. cit., pp. 12–13. Back |
74 | Heathgate Resources Pty Ltd, Submission no. 49, p. 3. See also: AMEC, op. cit., p. 4. Back |
75 | Under proposed reforms to the ALRA, the amount currently distributed to land councils for administrative costs (40 per cent) will be abolished and replaced with annual appropriations. Back |
76 | NLC, Submission 78.1, p. 2. Back |
77 | Mr Norman Fry (NLC), Transcript of Evidence, 24 October 2005, p. 24. Back |
78 | AMEC, op. cit., p. 4. Back |
79 | Mr Harry Kenyon-Slaney, op. cit., pp. 46, 55; ERA, op. cit., p. 4; ERA, 2005Annual Report, loc. cit. See also: Nova Energy Ltd, op. cit., p. 13. Back |
80 | Heathgate Resources, Exhibit no. 57, op. cit. Back |
81 | Eaglefield Holdings Pty Ltd, op. cit., p. 5. Back |
82 | ibid. Back |
83 | Dr Roger Higgins (BHP Billiton), Transcript of Evidence, 2 November 2005 , pp. 7, 16. See also: UIC, op. cit., pp. 12–13. Back |
84 | SACES, loc. cit . Back |
85 | Mr Michael Nossal , Olympic Dam Development Study , WMC Resources Ltd, Melbourne , 2004, p. 10. Back |
86 | Mr Alan Eggers, op. cit., pp. 9–10. Back |
87 | ibid., p. 5; Summit Resources Ltd, Exhibit no. 77, Presentation by Mr Alan Eggers, p. 32. Back |
88 | Eaglefield Holdings Pty Ltd, op. cit., p. 5. Back |
89 | Spot price for U 3O 8 at 1 June 2006 . Uranium market prices available at <http://www.uxc.com/>. The in-ground value calculation also assumes an exchange rate of US$0.78. Back |
90 | NTMC, Submission no. 51, p. 5. Back |
91 | Dr Ron Matthews (NTMC), Transcript of Evidence, 24 October 2005 , p. 34. Back |
92 | Mr Harry Kenyon-Slaney (ERA), op. cit., p. 49. Back |
93 | Calculation based on a spot price of US$43 per pound U3O8 and an exchange rate of A$1=US74.5c. Back |
94 | Mr Alan Eggers , op. cit., p. 5. This figure is likely to underestimate the value of the resource as the spot price is now considerably higher. Back |
95 | ibid., p. 7. Back |
96 | Nova Energy Ltd, op. cit., pp. 11–12. Back |
97 | ibid. , p. 12–13. Back |
98 | Summit Resources Ltd, Exhibit no. 77, op. cit., p. 18. Back |
99 | See for example: Compass Resources, op. cit., pp. 2, 4; Mr Keith Alder, Submission no. 7, p. 1; R Broinowski, Fact or fission: the truth about Australia's nuclear ambitions, Scribe Publications, Melbourne, 2003, p. 242. Back |
100 | Compass Resources, op. cit., p. 2. Back |
101 | Dr Malcolm Humphreys (Compass Resources NL), Transcript of Evidence, 16 September 2005 , p. 61 Back |
102 | Mr Keith Alder , Transcript of Evidence, 16 September 2005 , p. 81. See also: Mr Alan Layton (AMEC), Transcript of Evidence, 23 September 2005 , pp. 21–22; Mr Alistair Stephens (Arafura Resources NL), Transcript of Evidence, 23 September 2005 , p. 57. Back |
103 | Mr Ian Hore-Lacy, op. cit., p. 89. Back |
104 | Mr James Brough (ANF), Transcript of Evidence, 16 September 2005, p. 43. Back |
105 | ibid. Back |
106 | See for example: Compass Resources NL, op. cit., p. 4; UIC, op. cit., p. 11; Nova Energy Ltd, op. cit., pp. ii, 25. Back |
107 | ibid. Back |
108 | UIC, op. cit., p. 11. Back |
109 | Mr John Carlson (ASNO), op. cit., p. 17. Back |
110 | Nova Energy Ltd, op. cit., p. 9. Back |
111 | ibid. Back |
112 | ibid. Back |
113 | Mr Keith Alder, Submission no. 7, p. 1. Back |
114 | ibid. Back |
115 | See for example: People for Nuclear Disarmament NSW Inc.(PND), Submission no. 45, p. 9; FOE, Submission no. 52, p. 22; MAPW, Submission no. 30, p. 4; Professor Richard Broinowski, Submission no. 72; p. 3. Back |
116 | PFND, op. cit., p. 9. Back |
117 | FOE, op. cit., p. 22. See also: ibid. Back |
118 | FOE, loc. cit. Back |
119 | FOE, op. cit., p. 23–4. Back |
120 | MAPW, op. cit., p. 4. Back |
121 | Jindalee Resources Ltd, loc. cit. Back |
122 | Mr Ian Hore-Lacy, op. cit., p. 90. Back |
123 | ASTEC, loc. cit. Back |
Print Chapter 9 (PDF 180KB) | < - Report Home < - Chapter 8 : Chapter 10 - > |