SYDNEY — Just as Japan switched on the Australian economic miracle a generation or two ago, so China is giving it a recharge today. And the new source of the power surge promises implications for the whole Asia Pacific region.
Already a key resource supplier to energy-hungry China, Australia has signed a deal with Beijing that will allow it to become the dominant supplier of uranium for China’s nuclear-energy industry. The breakthrough signals a far more intensive era in Beijing-Canberra relations than mere trade, though a free-trade agreement cannot be far off.
Chinese Premier Wen Jiabao has returned home from Canberra after an extremely successful visit that saw him jog with Australian Prime Minister John Howard and sign a nuclear safeguards agreement. The deal will allow Australia, which has 40 percent of the world’s known uranium deposits, to supply uranium to be processed into energy for China’s booming nuclear-power industry. The pact also raises huge questions about Australia’s possible involvement in Asia’s nuclear-arms debate.
In money terms, the deal has Australian miners salivating. With an infusion of Chinese funds and technology, the way is open for more deposits to be found and mined. Uranium exports are set to rise five-fold in the next decade to an estimated $2.3 billion, depending on price. And that is before a row is settled with three Labor-controlled states that now ban uranium exports. Those bans, inherited from the antinuclear furor of ex-Prime Minister Bob Hawke, are haunting Labor’s tottering leader, Kim Beazley. Howard can’t wait to see Beazley toppled in a new uranium debate among a majority wanting to jump on the export bandwagon.
Once three approved mines in South Australia start producing — Australian-owned BHP Billiton’s Olympic Dam mine with a 15,000 tons a year potential export, U.S.-owned Beverley with 1,000 tons and Canada’s Honeymoon with 400 tons — uranium exports could double to 22,000 tons. Australia will then be in a position to supply one-third of China’s forecast annual needs.
But what will other Asian nuclear powers, notably India and Pakistan, see in this trend? Sensitive to likely criticism, Howard says exports to China will be under tighter international controls than those applying to the United States, which now takes 40 percent of Australian uranium. Under the new deal, China will have to open any of its jointly agreed nuclear facilities using Australian uranium to international inspectors.
Beijing is believed to have breached the Nuclear Nonproliferation Treaty in 1992 through its dealings with Pakistan’s non-safeguarded Khushab reactor. But Lance Joseph, former Australian governor to the International Atomic Energy Agency, says China has since proved itself to be more responsible.
As more countries gear up for the nuclear millennium, a debate is heating up here over how to strengthen international safeguards. Warnings from the antinuclear brigade are getting more and more dire. As one letter writer put it to a newspaper: “If we export uranium to China and India and after a row we get it returned as atomic bombs in retaliation for our alliance with the world’s biggest bully, we will only have ourselves to blame.”
Leslie Kemeny, an Australian foundation member of the International Nuclear Energy Academy, is urging Australia to become a main player in the peaceful use of nuclear energy. “Exporting uranium without value adding is just plain dumb,” Kemeny says. “And being involved in reprocessing and waste disposal strengthens Australia’s ability to guarantee global nonproliferation.”
Wen, a geologist by training, indicated to Canberra he is sensitive to these arguments. Howard is taking him at his word. The debate is escalating here, as it will overseas. Into the mix comes belated reports of Australia having signed earlier this year contracts to supply uranium to China’s arch rival, Taiwan.
The contracts with two Australian miners, BHP Billiton and ERA, were signed with electricity producer Taipower through Taipei’s unofficial embassy in Canberra. Without official recognition, Taipei uses a de facto embassy, providing for indirect trade through the U.S.
Canberra officials stayed mum while Wen was in town. Though Resources Minister Ian Macfarlane told one questioner: “There is a strong global uranium market. Canada has already signed multibillion contracts with China for the supply of nuclear reactors at the same time as arranging to sell uranium to Taiwan.
“As the largest holder of uranium, Australia can deal into the process of closely monitoring how it is used or we can just look on as others set rules we may not think are tough enough.”
The Sydney stock exchange is one of many that see big potential value in Wen’s visit. It has hit new records, with mining stocks going ballistic.
With an eye on projections that China will soon oust Japan as Australia’s No. 1 export market, Wen made welcoming noises about a free-trade agreement. Howard demurred. A shrewd judge of voter moods, Howard likes to enjoy the fruits of cheaper Chinese imports without pushing too quickly for too many Chinese cars, machinery and clothes. This juggling act will be sorely tested by Australia’s booming consumer hunger.
Like Canberra opinion, one influential newspaper is taking a pragmatic approach to the China question. “China already has enough social problems at home to attend to,” opined The Australian. “Premier Wen, and his open attitude towards Australia, India and the U.S., is to be welcomed. It is hoped closer economic and diplomatic ties between these nations will keep future tensions confined to the negotiating room.”
Pointedly, the paper did not add Japan to the trio. One Australian journalist in Beijing wrote after interviewing Wen: “The premier said Sino-Japanese relations were in difficulty. ‘This is something we do not want to see,’ Wen said. ‘The current difficulty is neither caused by China nor by the people of Japan. It is caused by the Japanese leader who has made repeated visits to Yasukuni shrine.’ “
Now that is a topic the new-look Sino-Australia relationship will steer clear of.
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