Scrutiny for Australia's India Uranium Ban

Discussion in 'Foreign Relations' started by SHASH2K2, Nov 17, 2010.

  1. SHASH2K2

    SHASH2K2 New Member

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    Australia's long-standing ban on the sale of uranium to India faces scrutiny again following the commitment this week by US President Barack Obama to support India's full membership of the Nuclear Suppliers Group (NSG).

    Speaking in New Delhi on Monday at the end of his high-profile visit to India, Obama promised to back India’s entry to the NSG in a “phased manner,” while India moved towards full adoption of the NSG’s export control requirements.

    The NSG was set up in 1974 specifically as a response to India’s first nuclear test in May 1974. Australia, which is a member of the NSG, holds about 40 percent of the world's known low-cost uranium deposits and already sells uranium to China, as well as to other buyers in the U.S., European Union, Japan, South Korea and Canada. It has also flagged possible sales to Russia.

    But since the mid-1970s, Australia has had a bipartisan approach that it would not sell uranium to India because it was not a signatory to the Nuclear Non-Proliferation Treaty (NPT).

    That policy was briefly overturned in August 2007 when then-Prime Minister John Howard agreed in principle to allow uranium exports to India, on the condition the uranium was used for peaceful purposes and India signed safeguard agreements with Australia and the United Nations.
    When Howard lost office in November 2007, the incoming Labor government led by Kevin Rudd reverted to the policy of no uranium sales to non-NPT members.

    Prime Minister Julia Gillard has continued that policy since replacing Rudd as Labor leader in June this year. During a 2009 visit to India when she was Deputy Prime Minister, Gillard said the policy was not directed specifically at India. “As a principle, we don’t sell uranium to countries that have not signed the NPT,” she told Indian media.

    This week’s joint statement by Obama and Indian Prime Minister Manmohan Singh moves India closer to wider acceptance into the nuclear community, despite its continued reluctance to sign the NPT. The other nations which are not in the NPT are Pakistan, North Korea and Israel.

    India and the United States already have a civil nuclear agreement under a deal struck by former US President George W. Bush during his 2006 visit.

    India’s 1974 nuclear test, the first by a nation outside the U.S., UK, France, Russia and China, was made possible by a nuclear reactor donated to India by Canada, which subsequently cut off the supply of further nuclear material and technology.

    US companies, along with rivals in Europe and Japan, are keen to sell civilian nuclear technology to India as it upgrades its power capacity.

    In their joint statement, Obama and Singh welcomed the start of negotiations between India’s state-owned Nuclear Power Corporation and U.S. nuclear energy companies. They “expressed hope for early commencement of commercial cooperation in the civil nuclear energy sector in India, which will stimulate economic growth and sustainable development and generate employment in both countries.”

    India is likely to need 8000 tonnes of uranium a year as it boosts its nuclear power output over the next decade. Its own domestic mines have limited capacity, so it buys additional uranium from France, Russia and Kazakhstan. It has signed civilian supply agreements with other producers such as Canada and Namibia, while Mongolia, South Africa, Nigeria and other African nations are viewed as potential sources.

    Australia’s Liberal Opposition is in favour of selling uranium to India, arguing that New Delhi has now signed an international convention covering nuclear accident liability, known as the Convention on Supplementary Compensation for Nuclear Damage.

    Deputy Liberal leader and shadow minister for foreign affairs and trade Julie Bishop said on October 28 that Labor’s ban on uranium exports to India was “illogical, hypocritical and depriving the Australian mining sector of access to a key and growing market in the important early stages of development.”

    Former Liberal PM John Howard told the Foreign Correspondents Association on November 5 that he regretted that the Rudd government abandoned the process of possible uranium sales to India.

    Howard said that after his visit to India in March 2006, he set in chain a process for uranium sales, even though India was not a signatory to the NPT. By August 2007 Howard had received sufficient Indian assurances on safeguards for him to announce the Liberal coalition government’s decision to allow sales.

    “I believe we should sell uranium to India,” Howard said last week. “India doesn’t have the NPT, but it has other protocols, and India will get its uranium from elsewhere. It is a great pity that it is not buying uranium from Australia, when we are prepared to sell uranium to China and Russia.”

    Howard said he wished he had reached his “2006 mindset” towards India much earlier.

    “When we met in 2006, Dr Singh made a remark that resonated strongly with me. He said that India and Australia were two countries that had a lot in common, but very little to do with each other,” Howard said.

    Though Labor shows no sign of changing its policy, it is likely to be a subject of discussion ahead of the visit to Australia by Prime Minister Singh next year, following an invitation issued by Gillard when the two leaders met at the East Asia Summit in Hanoi on October 30.

    Singh’s visit would be the first by an Indian prime minister since Rajiv Gandhi in October 1986. Singh is likely to be in Australia in October 2011, when the Commonwealth Heads of Government meeting is due to be held in Perth.

    All of Australia’s annual uranium production of 10,500 tonnes is exported. Sales in 2009-10 were worth about $1.1 billion, with the Australian Bureau of Agriculture and Resource Economics (ABARE) forecasting sales will rise by 2014 to 14,000 tonnes, worth $1.7 billion.

    Australia’s three operating mines are BHP Billiton-owned Olympic Dam in South Australia, Beverley (owned by Heathgate Resources, a subsidiary of US company General Atomics), also in South Australia, and the Ranger mine in the Northern Territory, owned by Energy Resources Australia, which is majority owned by Rio Tinto. Other mines have been foreshadowed in South Australia and Western Australia.

    The Australian Uranium Association, representing interests across the industry, says it sells uranium only to countries that have both signed the NPT and entered into bilateral export treaties with Australia.

    But it has given itself some “wiggle room,” arguing that Australia’s diplomatic effort should aim to help bring the non-signatories into the NPT or, at least, to find other mechanisms that align their behaviours with the expectations of the NPT.”

    If those “other mechanisms” align Indian behaviour with NPT expectations in a way that convinces Labor, a policy shift is a possibility.

    http://nuclearexportcontrols.blogspot.com/2010/11/scrutiny-for-australias-india-uranium.html
     
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  3. hit&run

    hit&run Elite Member Elite Member

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    India can not buy Uranium to such a quantity that Australia may think it in terms of economical package so to lift the ban. Secondly Australia has committed its self has a non nuclear and pseudo peaceful nation up against nuclear weapons therefore they are going to keep the ban. Thirdly there is no proactive Indian lobby following OZ govt. to lift the ban. Indian pursuance is very benign for Australia to leave the high moral ground she has taken for a long time. Last but not least Australia will use this card at the right time where she be able to leverage yellow cake deal during some futuristic bargain with China.
     
  4. Yusuf

    Yusuf GUARDIAN Administrator

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    PM is slated to visit Australia next year and supply of uranium is high on the agenda. I think it is more or less certain that Australia will come around and lift its ban on india. Just a matter of time. The new PM is more inclined to do business with India.
     
  5. mayfair

    mayfair Elite Member Elite Member

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    So Australia supplies Uranium to a nuclear weapons state such as China which has been implicit in transferring nuclear technology to a non-NPT signatory i.e. Pakistan, but Australia (more specifically Labour Australia) will not sell Uranium to another non-NPT signatory which has an impeccable track record?

    What kind of outback logic is that?
     
  6. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    Do we even need to import from Australia when Kazakstan,Canada,Russia and USA will more than meet our requirements??
     
    Last edited: Nov 18, 2010
  7. pmaitra

    pmaitra Moderator Moderator

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    No we don't have to import from Australia when Russia, Canada, Kazakhstan and USA can fulfill our demands. Just that Australia is closer and shipping will be cheap.
     
  8. SHASH2K2

    SHASH2K2 New Member

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    Uranium is not coal that it will be shipped on daily basis and everyday a ship will be arriving. It all depend on quality of uranium and how economical it is to process and purify the uranium . In this case Transportation cost will be irrelevant.
     
  9. SHASH2K2

    SHASH2K2 New Member

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    This is Australian logic. For them we are more evil than china because we beat them in cricket.
     
  10. Yusuf

    Yusuf GUARDIAN Administrator

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    We do need Aussie uranium. They have the cheapest recoverable deposit apart from being the largest reserve in the world with nearly 40%. A stable deal with Australia is more desirable too. Shipping cost is not a factor at all in sourcing from australia as shipping costs are pretty much negligible in the overall picture. just to give you guys an example, a 20 foot container carrying 20 tons of cargo of mine from taiwan costs depending on the demand supply situation from as low as $300 to $1500. Now that as a percentage of cost of my cargo is just about 1%.

    See Russia is these days known to work on whims and fancies as the EU has discovered in their deal with Russia over gas prices. India too has had a share of its price problems with Russia. Kazakastan too has a huge reserve but its stability will always be in question as also its reliability in terms of it getting pocketed by others which includes China. There are good deposits in Africa too which india is working with. But again the point is that we need to have a diverse source so that we are not dependent on any one which puts us at a risk. The case is similar to oil and gas where we are looking to have diverse sources.
     
  11. mayfair

    mayfair Elite Member Elite Member

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    A loss in cricket vs Loss of prestige when Australian citizens and a corporation were made to bend over and part their legs in the Rio Tinto soap opera..

    Hmm..well whatever floats their boat. :happy_2:
     
  12. Yusuf

    Yusuf GUARDIAN Administrator

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    Australian policy is based on supply to members of NPT simple. China is a member of NPT and so it gets Aussie yellow cake. India is not so it doesnt. But policies change over time. india is now an unofficial and soon to be an official member of the regime that was created against it. And its entirely possible that one fine day Australia may sanction an increasingly aggressive China!!
     
  13. SHASH2K2

    SHASH2K2 New Member

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    Absolutely correct assessment . There is one more factor that may swing Aussies in our favour. Nuclear fuel is not something thats is used on daily basis in reactors . once reactors are loaded one can sit Idle for years. India has just started its nuclear reactors manufacturing and potential to make money out will be huge . If Australians loose it they loose a big chance to make money and also access to one of largest future market for them. So if its loss for us its a bigger loss for them .
     
  14. pmaitra

    pmaitra Moderator Moderator

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    Yes, Uranium is not coal. Yes, it will not be arriving on a daily basis. However, it is not true that transportation costs will be irrelevant.

    There are two ways they can be transported:
    • Unprocessed: Rocks containing U3O8 that will have to be processed and enriched.
    • Semi-processed: One example would be granules of U3O8 in a jelly like medium in tine cases or jars, which will be placed in bigger protected and sealed containers.
    • Enriched: They may be weapons-grade or reactor-grade requiring again lots of protection and packaging, but I doubt it will happen in India's case.

    In all the above cases, for every ounce of usable Uranium, a whole lot of weight is added that makes it significantly more expensive to transport than coal because:
    • In nature, uranium is found as U-238 (99.2742%), U-235 (0.7204%), U-234 (0.0054%) and this is after uranium has been separated from rocks. This gives an idea how much ore yield how much usable uranium.
    • Transportation involves weight of containers, handling, security costs.

    The other point is, regardless how frequently a reactor is refueled, the enrichment facilities will have to work continuously because a lot of effort and time is required to convert mineral rocks into a very tiny amount of reactor grade (or weapons grade) uranium. Also, a lot of uranium cannot be handled together, especially in centrifuges where heavier U-238 dust tend to accumulate in the outer radius and lighter U-235 dust in the inner radius and then they are separated and this process is repeated several times over to get good enrichment. Hence, frequent, if not daily, supply of Uranium is required making transportation costs absolutely relevant.
     
    Last edited: Nov 18, 2010
  15. SHASH2K2

    SHASH2K2 New Member

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    Question is will Australia allow us to import raw uranium and process it here . If they process it in their country they can get more employment and more money for processed material.
    I think Canada and Khazakastan has allowed us to setup ore processing facility in their country so even from there we will not be importing unprocessed material .

    http://www.world-nuclear.org/info/inf48.html
     
  16. Yusuf

    Yusuf GUARDIAN Administrator

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    Like i said before, transportation cost as a percentage of material cost is really insignificant. Transportation alone cannot be the reason to go with Aus.
     
  17. pmaitra

    pmaitra Moderator Moderator

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    @Yusuf

    Yes, transportation costs alone cannot be the reason to go with Aus. However, could you please elaborate why you think 'transportation cost as a percentage of material cost is really insignificant' [sic]? As per my understanding, you are nowhere near a reasonable estimate of transportation costs; however, I am trying to find possible flaws in my own understanding and you can help me point them out. Thanks.

    @SHASH2K2

    We do import coal, but we export iron ore. I am not aware of India importing iron ore.
     
  18. Yusuf

    Yusuf GUARDIAN Administrator

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    pmaitra, i have explained earlier as well. My one 20 feet container has 20Tons and has about $30,000 worth of goods. The transportation of it ranges from $300-#1500 depending on the demand supply thing. do the math.
     
  19. SHASH2K2

    SHASH2K2 New Member

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    We don't import Iron ores but there are many countries who import ores from us . Even China ships ore from India and Africa. when transportation cost is not a factor for Iron ore and Coal for something as costly as Uranium one should even give a single thought about transportation cost. Even if we import Uranium ore instead of processed one transportation will not be a factor. Moreover we will be buying processed uranium .
     
  20. pmaitra

    pmaitra Moderator Moderator

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    I did my math and it seems you did not do your's properly. Your claims (that transportation costs, or the difference thereof, are insignificant) are unsupported, totally off the mark and based on your assumptions. Check out the figures below:

    Assuming we import mineral ore from Kazakhstan and Australia (cost unknown and assumed to be equal):
    • Kazakh Ore: Ore concentration is (0.05%–0.4% U3O8) and distance between Vladivostok to Chennai is 4562 nautical miles + transportation on the TransSib and/or BAM.
    • Aussie Ore: Ore concentration is (19%–24% U3O8) and distance between Fremantle to Chennai is 3396 nautical miles + significantly shorted inland distance.
    The ratio of the costs of transporting Kazakh Ore to Aussie Ore is going to be (4562/0.4%):(3396/24%) = 80.60:1, which shows that Aussie ore is ridiculously cheaper.

    Assuming we import ore concentrate from Kazakhstan and Australia (cost US$60/lb approx.):
    The ratio of the costs of transporting Kazakh Ore to Aussie Ore is going to be (4562):(3396) = 1.34:1, which again shows that Aussie ore is significantly cheaper.

    Moreover, adding transportation costs over railway from Kazakhstan to Vladivostok over the Trans-Siberian Railway is going to be significantly more than the inland transport from Aussie Mines to Fremantle. Kazakh ore costs are assumed to be comparable to Russian ore costs. I didn't even do the math for Canadian, US or Namibian ore, but for them as well, I am pretty sure, the costs will not be less than Aussie ore.

    References:
    http://www.wise-uranium.org/
    http://en.wikipedia.org/wiki/Uranium_ore
     
  21. Yusuf

    Yusuf GUARDIAN Administrator

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    My math is alrite but your assumption in doing the math is not. Transportation cost is not based on the concentration of the ore and the distance. But your point only proves that because Aussies are the ones to go with because of better quality of theory ore.
     

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