Safety Issues Plaguing Nuclear Have Been Overcome

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Bryan Camoens:
What are some of the drivers of growth for demand in Australian uranium?

Simon Clarke:
The key drivers of growth in demand for Australian uranium are external to Australia.
Broadly they are population growth (and the growth in consuming ‘middle classes’ in
countries like China and India) driving significant growth in demand for electricity.
Along with national Governments’ concern to secure long-term security of electricity
supply, population growth is expected to result in 2.5% compound annual growth in
world electricity consumption up to 2030 (International Energy Agency, World
Energy Outlook 2009). To supply the electricity required, many countries are looking
to expand and refurbish their existing nuclear reactor fleets or to adopt nuclear for the
first time and grow that capacity rapidly. More than 50 new reactors are under
construction around the world – much of that new capacity in Asia – and the markets
are starting to show the first signs that utilities are beginning to seek uranium supply
for first loads for these new machines. In this context, the Australian uranium industry
needs to keep working hard to develop new capacity to make the most of the
emerging opportunities.

Bryan Camoens:
With Asia looking to nuclear energy as a cleaner form of energy, what are the
potential opportunities for Australian uranium in Asia?

Simon Clarke:
Australia has long had good customer relationships with countries in Asia that use our
uranium to fuel their vital nuclear energy industries. In particular, Japan, South Korea
and Taiwan have all relied on Australian uranium supplies for many years. China has
become a customer of the Australian uranium industry within the past two years with
the ratification of a bilateral safeguards agreement and China’s adoption of an NPT
Additional Protocol in its arrangements with Australia. Both Australia’s biggest
producers (BHP Billiton Ltd and ERA Ltd) now have supply arrangements with
utilities in China. The China Guangdong Nuclear Power Company has recently
become majority shareholder in an important uranium development project in the
Northern Territory of Australia. Other Chinese companies are also investing. The
Government of India and electricity utilities on the sub-continent have expressed
interest in securing supplies of Australian uranium, but are prevented from doing so
by the fact that current Australian Government policy prohibits supplying Australian
uranium to a country (like India) which has not signed the Nuclear Non-Proliferation
Treaty. The Australian uranium industry is aware that several other Asian and Southeast
Asian nations, including Vietnam, Thailand and Indonesia, have expressed
varying levels of interest in developing significant nuclear reactor fleets during the
coming decades. The emergence of these possible new sources of demand for nuclear
fuel is likely to present opportunities for the Australian uranium industry.

Bryan Camoens:
How will China’s large new nuclear build programme impact the global
industry?
 

Simon Clarke:
The vast planned growth of the nuclear fleet in China is the world’s biggest and best
example of confidence in nuclear energy as a vital solution to the challenge of
providing pollution-free, reliable electricity.
China’s key concerns in energy policy are:
> reducing the choking air pollution (mostly caused by the burning of coal for
domestic and industrial purposes) which causes unacceptably high levels of morbidity
and mortality through respiratory disease, and
> securing a reliable future electricity supply through massive use of domesticallycontrolled
nuclear technology coupled with secure, long-term fuel supply
arrangements.
 

Reducing greenhouse gas emissions and contributing to the global effort against
climate change probably comes third after these two drivers.
In terms of potential new uranium demand, expansion of the Chinese reactor fleet will
present opportunities for uranium producers in various countries to enter new supply
arrangements. Australia will benefit in terms of both direct Chinese investment in
advanced projects and in the develop of more long-term uranium supply agreements.
But Australia will not be alone. China will spread its risk by developing investment
and supply arrangements with the uranium industries in a number of countries. An
initial view of the various other demands that the Chinese new nuclear program is
likely to create would suggest China’s planners and policy-makers have a ‘homegrown’
approach. In doing all the things necessary to grow its nuclear reactor fleet
quickly, China seems to be developing a great deal of self-sufficiency. Domestic
manufacturing of plant and equipment will be maximised, with self-reliance in design
and project management. China appears to be developing great skill in ‘indigenizing’
overseas-sourced reactor designs (and retaining ownership of the Intellectual
Property) and is driving its new reactor building program with localized reactor
designs, such as the CNP-1000; CPR-1000 and CAP1400.
 

Bryan Camoens:
Could you please give us the latest update on the Australian policy climate on
nuclear energy?
 

Simon Clarke:
Australia’s climate change policy is in a highly fluid state, and not just because we are
currently (July-August) in the middle of a general election campaign. The former
Prime Minister, Mr Kevin Rudd, initially championed, then abandoned, a relatively
modest policy to tackle climate change by instituting a carbon emissions trading
scheme. The scheme set a target range for Australia's greenhouse gas emissions in
2020 of between 5% and 15% less than 2000 levels. After mixed efforts to explain
how the scheme would operate, Mr Rudd was eventually persuaded that the scheme,
though modest, could not be achieved politically. He deferred action until 2013. His
reversal on this policy was one of the issues that led to the Australian Labor Party
removing him as its leader and, therefore, as Prime Minister. His replacement as
Labor Leader and Prime Minister, Ms Julia Gillard, has also deferred action until
2013 and has announced during the election campaign that she will establish an expert
commission and a 150-person ‘Citizens’ Assembly’ to try to build a national
consensus on climate change policy. Her opponent in the election, Liberal party
Leader Tony Abbott, has described the Citizens’ Assembly as “a glorified focus
group” and has declared he is opposed to an ETS and to the setting of a carbon tax.
Mr Abbott proposes instead a range of direct actions to tackle the consequences of
climate change. Australia’s climate change policy is far from settled.
 

Bryan Camoens:
What are some of the challenges in competitiveness with regards to the future of
the Australian uranium industry?
 

Simon Clarke:
Flaws in the policy and regulatory framework under which the Australian uranium
mining industry operates present cost and time challenges which tend to affect the
industry’s capacity to compete with lower-cost uranium suppliers, such as those in
Kazakhstan; Namibia and some other countries. Australia generally tends to be a
higher-cost producer country in a range of areas, not just uranium. Australia’s system
of Government operates at three levels, local, State (regional) and Federal (national)
and elements of regulation exist at all three levels, although it is mainly at the State
and Federal levels that regulation and policy relevant to mining is imposed. There is
inconsistency on fundamental policy on uranium mining, which is banned in three of
the six Australian States, and in one of the two Territories. As well, uranium
exploration is banned in two States, but permitted in one of the States that bans
mining. There is some duplication of regulation between the State and Federal levels.
Uranium mining is subject to considerable additional regulatory assessment and
review, compared with all other forms of mining in Australia. These policy and
regulatory hurdles add to the cost of uranium mine development and also tend to
make assessment and approval processes longer. Higher regulatory costs make it more
challenging for projects to meet feasibility criteria, especially at relatively low
uranium price levels. Extended time frames also make it more challenging to respond
swiftly to new customer opportunities. Competitor countries with less burdensome
regulatory systems are more readily able to overcome these cost and time hurdles. The
Australian Uranium Association continually presses for regulatory reform and a set of
reform proposals, produced by an industry-Government advisory body, is awaiting
Government adoption and implementation.
 

Bryan Camoens:
In your opinion is Nuclear a feasible option for the future of power generation or
are there still safety, technological and political issues that need to be addressed?
 

Simon Clarke:
The Australian Uranium Association strongly supports the use of nuclear energy as a
readily available, reliable and cost-effective solution to the related challenges of
energy security, air pollution and greenhouse gas emissions. Countries wishing to
tackle these challenges need to consider nuclear alongside renewable energy sources
and ‘clean’ fossil fuel sources. Each technology has its advantages and its limitations
and each country must make its own choices based on individual circumstances. The
safety issues that had plagued nuclear energy last century have largely been
overcome. Many people still have strong memories of past incidents, and nuclear
opponents refresh those memories constantly and play on residual fears. The key
technological challenges of managing spent fuel and storing radioactive waste have
largely been solved.

My personal opinion is that ideologically-tainted political opposition remains the
biggest hurdle to wider acceptance of nuclear power. I believe that in time, that
influence will wane and more rational considerations will prevail.