Australian Visit Yields Uranium Sales

Australian Prime Minister Julia Gillard concluded her first visit to  India on 17OCT12. During the visit, Gillard and Indian Prime  Minister Manmohan Singh discussed the resumption of uranium sales,  since Australia overturned legislation in December 2011 that banned uranium  sales to India — a country that has not signed  the NPT.

Stratfor recently reported on the trip, a few pertinent excerpts follow:

India’s energy needs are  rising — natural gas consumption rose nearly 30 percent between  2009 and 2010 — and domestic production of coal, natural gas and oil are  declining due to poor management, lagging infrastructure and  a difficult regulatory environment.

According to the Indian Ministry of Power, India currently has a  power-generation capacity of more than 206 gigawatts, among the highest in  the world. More than 56 percent of the country’s power generation relies on  coal, while hydropower and natural gas contribute 19 percent and 9 percent,  respectively. India’s dependence on coal — much of it imported — and the  difficulties associated with its production, transport and land  acquisition for mining are just some of the central government’s  historical challenges in implementing its energy goals.

 India’s 20 nuclear power plants currently supply about 2 percent of overall  domestic electricity consumption, but New Delhi hopes to add  63 gigawatts of nuclear power within the next two decades. This  increase would raise nuclear power’s overall share of domestic electricity  production to 8 percent by 2030.

Australia possesses about 40 percent of global uranium reserves and  has had its own difficulties supplying India’s civilian nuclear fuel needs due to the NPT.

Australia is attempting to shift its economic reliance away from iron ore and  coal, its two primary export commodities, since Chinese long-term demand  for these resources is expected to decrease and production  costs are rising. With Germany and Japan diversifying away from  nuclear power, Australia has been seeking new export markets for uranium.  Also, Japan’s nuclear power firms have been seeking export markets for  their nuclear technology. With its massive consumer base and growing need  for power, India could offset waning consumption in both Germany and  Japan.

However, India shouldn’t expect to see the new resources for at least a year or so, according to reporting in the Australian press, as companies prepare to get their machinery back up and running.

According to reporting in the WSJ, “Australia has the world’s largest known reserves of uranium, but accounts for only 11% of global yellowcake output, making it the third-biggest producer after Kazakhstan and Canada.

Beyond being a major producer, one of the main reasons there’s been a change of heart may be due to politics from below. Queensland, one of Australia’s major pioneers of Uranium production, fears a new downgrade in its credit rating as it has slashed government jobs and hiked royalties on coal miners to raise revenue.  With an estimated $18 billion in untapped uranium, Queensland can’t afford to dilute its earning potential, especially with increasing global deficit by 2014, according to Morgan Stanley.

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