Canberra and Beijing Near Uranium Pact

By David Lague

Australia said Monday that it was poised to sign an agreement with China clearing the way for the sale of uranium for Chinese nuclear power stations as the price of the fuel continues to soar on rising demand.

Energy industry analysts suggest that China could sign an agreement guaranteeing that Australian uranium would only be used for peaceful purposes as early as next month, when Prime Minister Wen Jiabao of China visits Australia.

The Australian government has insisted on such an agreement as a condition to beginning uranium shipments to the energy-hungry country, which plans to increase the share of electricity generated from nuclear power from the current level of about 2 percent to about 6 percent over the next two decades.

A spokeswoman from the Australian Department of Foreign Affairs in Canberra said officials from both sides had “made substantial progress” during talks in Beijing this month on the safeguard agreement and nuclear cooperation.

“Both sides are satisfied with the results of the negotiations and are confident of a successful outcome in the near future,” she said.

With high oil prices expected to continue and growing international concern over the environmental impact of greenhouse gas emissions, some energy analysts say a global “nuclear renaissance” is under way.

China and India, Asia’s two emerging economic powerhouses, are at the forefront of this renewed global enthusiasm for nuclear power.

This has translated into sharply increased demand for uranium, with the price increasing 76 percent in 2005.

After decades in the doldrums, uranium is now riding high at about $40 a pound, and most industry analysts expect further strong gains over the remainder of this year.

Australia has the world’s biggest deposits of uranium, and its miners stand to earn a windfall if demand remains strong.

Analysts and senior government officials in Canberra say Australia’s annual uranium exports could triple to more than 30,000 metric tons by the end of this decade. However, there seems to be no immediate prospect that Australia could also supply nuclear fuel to India, despite requests from New Delhi.

Foreign Minister Alexander Downer of Australia on Sunday said in an Australian Broadcasting Corporation television interview that Canberra would continue its ban on supplying uranium to countries that had not signed the Nuclear Nonproliferation Treaty, as India has not done.

For China, expanding the share of electricity generated from nuclear power stations is crucial for its long-term plan to reduce dependence on polluting fossil fuels and diversify its energy supplies.

“Energy is going to be the most important issue for the Chinese economy going forward,” said John Johnson, the chief representative in China for the London-based commodity consultancy CRU International. “The environment is also a big concern, so nuclear power has to be almost top of the list as an alternative.”

In his report on March 5 to the annual session of China’s National People’s Congress, now under way in Beijing, Wen pledged that China would accelerate its development of “clean energy,” including nuclear power.

In addition to the nine nuclear power stations now in operation, Beijing plans to add up to 40 reactors with a total value of about $50 billion by 2020, according to reports in the official Chinese media.

As part of its negotiations with Canberra over nuclear fuel supplies, Beijing has also expressed interest in uranium exploration and mining in Australia.

Some analysts also say there is potential political mileage for Beijing in getting uranium from Australia, a close ally of the United States.

As Australia becomes increasingly dependent on trade with China, the analysts say, Beijing will find it easier to exert pressure on Canberra if it continues to side with Washington on contentious issues, including U.S. support for Taiwan.