Published in the Australian Financial Review, Monday, 25 July 1994, p. 16.
The numbers are probably against any change in policy. But that should not stop public consideration of what this year’s ALP national conference, to be held in September, should decide about uranium mining.
For the government’s “three-mines” policy is economically and politically redundant. A rethink is in the national interest.
Indeed the issue of value adding, such as through enrichment in the nuclear fuel cycle, should be part of any serious debate in Australia.
A decade ago, the 1984 national ALP conference voted to allow exports of uranium from only three mines: Ranger, Roxby Downs (Olympic Dam) and Nabarlek.
A few years earlier, the ALP was convulsed by debate over uranium policy. In the Opposition years, in the late 1970s, Labor opposed any nuclear exports.
This was the weird era when inner-city councils in Sydney and Melbourne would vote to declare themselves nuclear-free and placard municipalities with nuclear-free signs. As if Richmond or Leichhardt would be threatened by the uranium industry!
The so-called “Hogg amendment” [named after the drafter, the then national ALP secretary Bob Hogg] adopted at the 1982 conference allowed uranium mining to proceed where export licences had already been granted and at Roxby Downs (a sop to the South Australian delegates nervous at losing the political capital and economic benefits of what was claimed would be the world’s largest uranium mine).
It was harder after 1982 for the party activists to unctuously moralise about uranium mining. If it is OK in some situations, why not wherever the market might create an opportunity?
Of course, Australian government policy has never been to support open slather in the uranium export business. The debate has always turned on the “safeguards” surrounding uranium mining policy.
The 1984 conference actually tightened the policy – ignoring some of the approvals given by the Fraser government – and naming the three mines where development could take place.
One cynical intention of all of this was to encourage development at Roxby Downs. If there were only three mines allowed, then the economic incentives were supposed to be greater for that mining venture: developments elsewhere could not “crowd out” the Roxby Downs opportunities, as developments elsewhere were not allowed.
Over the past decade, reality has not corresponded with what was predicted. And some changes to the international environment merit a fresh evaluation of the relevance of arguments formulated a decade ago.
Four issues are worth briefly mentioning.
First, uranium mining is now a more marginal industry within Australia than in 1984. In 1993, Australia exported 2,700 tonnes of U308 at a value of $123 million. The high point of $US40/lb for U308 in 1980 is far higher than the 1994 spot price of uranium ore at $US9.40 (after a low of SUS7 in 1991). Demand stabilised over the decade.
The projected boom in nuclear energy demand did not materialise, and neither did projections of an Australian bonanza – even though export earnings from the industry over the 1980s was more than several billion dollars.
Second, there are now only two operating mines in Australia. Nabarlek ceased production a few years ago.
Third, Roxby Downs has not been the promised El Dorado. Only a third of Australia’s uranium exports came from Olympic Dam in 1993. It is a far cry from the world’s biggest and best.
Compared with Roxby Downs’ 1,300 tonnes of exports, Canada’s Key Lake mine in Saskatchewan produced 6,270 tonnes or 24 per cent of the Western world’s uranium production in 1993.
Fourth, the Ranger mine is at a low, break-even level, producing half of its 3,000 tonne capacity.
The way things are going there is the possibility that the uranium industry in Australia will be non-viable within a few years.
This is because Australia’s uranium is exported under long-term contracts. The average selling price in 1993 was $US 17.50/lb – a huge premium over the current spot price.
However, some of those contracts will soon expire and negotiations are afoot to secure the existing market share. The result of such negotiations – together with some international developments – might be to kill off the existing industry.
So why would the Australian government want to be in the situation of sticking to a three-mines policy and wear the risks the industry faces at its most difficult adjustment period?
At the crude level of real politics, there is a lot to be said for the Australian industry’s proposals that the uranium industry, subject to international safeguards, be regulated in a similar way to the rest of the mining industry. There has been some lobbying for a change of policy. The miners are presenting glowing (no pun intended) pictures of how the industry is bound to boom in the future. We should be on board before the nuclear gravy train leaves the station – or so the story goes.
This probably under-estimates the long-term decline in the value of uranium (as with other commodity products), the impact of the flooding of uranium exports from the CIS countries, the recent agreements between the US and Russia that will see highly enriched uranium – now part of the nuclear weapons stockpile – being made available for nuclear energy and the huge head start Canada has in securing its place in world markets.
To really gain, Australia should consider enriching its reserves through the development of nuclear reactors – a taboo subject in the Australian political debate.
But why should this continue to be the case? Canada, for example, has sold 13 Candu reactors – something that has gone together with its efforts to increase uranium exports from the Saskatchewan mines.
With Australia’s northern neighbours, including Indonesia and Thailand, now considering adding nuclear reactors to their energy producing sectors, there are opportunities for Australia – not only in supplying uranium but also in the engineering and enriched product areas.
If only those opportunities might be allowed to develop. At the moment the Australian industry is heading nowhere.
In 1982, before the ALP national conference (I was an alternate delegate from NSW), I read extensively on uranium and concluded it was a useful energy source, less polluting than coal, for example.
Plus, there was a role for Australia in monitoring and policing the nuclear cycle, globally, on environmental and anti-nuclear weapons proliferation grounds.
I thought that Australia, with up to a third of known global uranium reserves, should track the cycle and, in our geologically stable continent, hold the resultant waste. What better way to see if certain nations were secretly stockpiling, enriching, and developing nuclear weapons?
On the main issues, I have held the same opinion ever since.