Australian Government's About Face on Uranium Exports to India

by Lisa Reisman on

TC Malhotra contributes to MetalMiner from New Delhi.

In a major policy change, Australian Prime Minister Julia Gillard declared on Nov. 15 that her ruling Labour Party would reverse its ban on selling uranium to India.

Australia-based environmental news agency ECO News reported that the Australia India Business Council (AIBC) has welcomed Australian Prime Minister Julia Gillard’s support for uranium exports to India. ECO News quoted AIBC Chairman Arun Sharma as saying that the move was in Australia’s broader national interest and would strengthen ties with India.

The AIBC was set up in 1986 following recognition of the enormous trade potential between the two countries by the prime ministers of the day, Bob Hawke of Australia and Rajiv Gandhi of India.

Uranium currently contributes over A$750 million to the Australian economy. Australia has close to 40 percent of the world’s low-cost uranium supply and is the world’s third-largest exporter, with most of its exports going to the US, Japan and South Korea.

United States President Barack Obama has also virtually backed Australian PM’s plans to sell uranium to India, saying it “seemed to be compatible with international law and the Non-Proliferation Treaty.”

Indian Prime Minister Manmohan Singh and his Australia’s Gillard met in Bali on Nov. 19 for brief talks, moving discussions forward on selling uranium to India and also reviewing their strategic partnership. Gillard made it clear that she would move her proposal forward to lift the ban on uranium sale to India.

India quickly hailed Gillard’s move. Indian Commerce, Industry and Textiles Minister Anand Sharma welcomed Australia’s decision to reverse the ban on selling uranium to India. Sharma, who met the premier of New South Wales, Barry O’Farrell, said this decision was in line with the strategic nature of the relationship between the two countries.

Market observers say that Gillard will be under pressure to get her party to agree to her proposal even though India is not a signatory to the Nuclear Non-Proliferation Treaty (NPT). The final decision rests with Gillard’s Labour party, which will meet next month.

For the past four years, the Labour government has linked uranium exports to India signing the 1970 NPT. However, Australia had supported the NSG waiver for India in 2008, and since then, India has maintained that it would wait for Australia to make its own decision on uranium sales.

India has an indigenous nuclear power program and expects to have 20,000 MWe nuclear capacity by 2020 and 63,000 MWe by 2032. The country aims to supply 25 percent of its electricity from nuclear power by 2050 and for that to happen, India needs uranium, a key fuel for nuclear power generation. India’s domestic uranium reserves are small and the country is heavily dependent on uranium imports to fuel its growing nuclear power industry.

India’s energy demand has nearly doubled during the last decade with the rising economy. India is now the world’s fourth-largest energy consumer. In terms of energy mix, India relies heavily on coal, oil and natural gas. But during the last decade, India has enhanced its nuclear power generation program.

India signed a civilian nuclear deal with the United States in 2005, and in 2008, Nuclear Suppliers Group (NSG) granted India a waiver to commence civilian nuclear trade. After the NSG waiver, India signed uranium supply agreements with Russia, France, Canada, Kazakhstan, Namibia, Mongolia and Argentina.

Before the US-India civilian nuclear deal, Russia was India’s only uranium supply source. Russia had helped India build the Kudankulam power station in South India and Russia has recently pledged to help India build four new nuclear power plants.

Although India currently has 20 nuclear reactors in six power plants, nuclear power supplies less than 3 percent of India’s energy needs.

–TC Malhotra




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