China: Uranium Deal With Australia Stirs Contrasting Views

China: Uranium Deal With Australia Stirs Contrasting Views

By Breffni O'Rourke, Radio Free Europe / Radio Liberty - http://www.rferl.org/featuresarticle/2006/04/34EE70D3-CA80-47E5-BB5C-5D738EF94C9C.html

5th April 2006

China and Australia signed a nuclear-safeguards agreement on April 3 that opens the way for China to buy vast quantities of Australian uranium to fuel its expanding civilian nuclear -power industry. Australia contains an estimated 40 percent of the world's uranium reserves, and Chinese orders -- possibly as high as some 20,000 tons annually -- will make a major impact. But not everybody thinks supplying China with the basis for nuclear fuel is a good idea.

This week's agreement has brought into focus differing perceptions of China and whether it poses a threat to the Asia-Pacific region.

The bilateral safeguards agreement is meant to ensure that China does not use for military purposes any uranium that it buys from Australia. As such, the document reinforces China's existing commitments under the international Nuclear Non-Proliferation Treaty (NPT).

The government-to-government safeguards deal opens the way for Australian mining companies to compete to supply as much as 20,000 tons of uranium oxide to China annually -- double Australia's entire present production.

Popular Decision?

A senior political correspondent of the respected Australian daily "The Age," Michelle Grattan, says that as she sees it, the Australian people largely support selling uranium to China:

''[The Australian public] quite accept exporting to China; Australia sees itself as having quite a deal of common interest with China," Grattan says. "China is already a big buyer from Australia, a big market, and of course a lot of Chinese goods are exported to Australia. The two have had a very strong trade relationship for a long time."

Not Without Risk

Grattan says that Australian Prime Minister John Howard has gone out of his way in recent days to say that he sees no merit in the argument for "containment" of China.

However, not everyone shares that view. Senator Christine Milne, the head of the Australian Greens Party, says the conservative Howard government is dazzled by the potential profits, and is turning a "blind eye" to the dangers.

Milne says she does not believe the safeguards deal will be effective.

"Australia is saying under the safeguards agreement that everything will be fine, that somehow the uranium will be able to be guaranteed to go to the nuclear power cycle," Milne says.

Impossible To Safeguard

But she says that China, as an acknowledged nuclear-weapons state, has the power to nominate which particular facilities can be inspected by the International Atomic Energy Agency (IAEA), and can withdraw that permission at any time. This essentially makes control of uranium stocks impossible.

"So there is no real safeguard about where Australian uranium will go, and [further], the facilities in which the uranium will be converted and enrichment are likely to be military facilities, which do not come under the safeguards at all," Milne says.

Milne gives little credence to the sentiments expressed by Chinese Prime Minister Wen Jaoboa to journalists in Canberra on April 3: "China and Australia are conducting nuclear cooperation and this is solely for peaceful purposes. We must observe the Nuclear Non-Proliferation Treaty principles."

Milne, speaking from the Tasmanian city of Launceston, notes that China had already transferred nuclear technology to a highly volatile part of the world. She says that calls into question its reliability.

"China is a country which has previously sold and made available nuclear technology to Pakistan," Milne says. "China said last year that it did not have enough uranium for both its civilian power stations and its military program. So whichever way you look at it, Australian uranium will either go directly to the weapons program via the uranium-enrichment facilities or [it] will displace Chinese uranium."

Keen Business Partners

The business community in Australia is understandably pleased at the safeguards deal.

Ian Head is public-relations chief of Rio Tinto, a Melbourne-based conglomerate that produces some 5,800 tons of uranium oxide annually from its mine at Kakadu in the Northern Territory.

He says China is "absolutely" a good business partner.

"Both Rio Tinto and Australia have had trade relationships with China for quite a number of years, in the case of Rio Tinto companies, [supplying] Iron ore, aluminum, industrial minerals, we have been dealing with China for 30 or 40 years, in some cases longer than that," Head says.

BHP Billiton, also based in Melbourne, produces some 4,000 tons annually from the Olympic Dam mine in South Australia state. Media-relations chief Samantha Evans stresses how important Chinese business already is to her company.

"China is our biggest single country customer in that sense; sales to China account for 16 percent of our global sales," Evans says.

With the ink barely dry on the safeguards agreement, business people say it will be at least 2010 before the move translates into actual supply of Australian uranium to China.