Kim Wilkie (Swan, Australian Labor Party) Share this | Link to this | Hansard source

Report 81: Treaties tabled on 8 August 2006, released by the Joint Standing Committee on Treaties, concerning the Agreement signed between Australia and China for the Transfer of Nuclear Material and for Cooperation in the Peaceful Uses of Nuclear Energy, is an important document for Australia and its stance on nuclear non-proliferation. Although the committee recommends that binding treaty action be taken for both of these agreements, it is doing so on the basis of recommendations for Australia to lead a new initiative to strengthen nuclear safeguards.

While the exports enabled by the agreements represent a boom for the Australian uranium industry, there are some legitimate concerns about the effectiveness of the international safeguard system to monitor nuclear activity. Today, 31 countries operate 440 commercial nuclear power reactors and generate a total capacity of around 369 megawatts of electricity around the world. According to the OECD in its publication Uranium 2005 resources, production and demand for nuclear power generation are projected to increase by between 90 and 115 per cent by 2020. Overall it can be reasonably expected that nuclear energy will play an important and significant role in meeting the world’s future energy needs. Twenty-four new reactors are under construction and plans for a further 40 are in advanced stages. China alone plans to have 27 new reactors operational by 2020, while Japan is planning to increase its reliance on nuclear energy from 30 to 41 per cent by 2014.

In 2004 Australia produced almost 20 per cent of the world’s trade in uranium for fuel and nuclear power reactors. Considering that Australia is believed to possess 24 per cent of known uranium reserves and 40 per cent of reserves can be mined at low cost, it is timely that we consider how Australia will deal with increased demand for its uranium. The market for uranium is changing significantly. Until recently, uranium was a buyer’s market. For the past 25 years the uranium market has been oversupplied and nuclear power has been out of favour. In addition, the existence of large stockpiles of secondary nuclear fuels—that is, those derived from decommissioned warheads—depleted uranium tails and reprocessed uranium has dampened demand for newly mined uranium. Today, however, secondary supplies are dwindling and mining operations are struggling to meet the recent surge in demand, subsequently driving up the price of uranium.

Since 2001 the spot price for uranium has increased nearly fivefold, from around $US9 per pound to $US43 per pound as of June last year. With demand to outstrip supply in the next 10 years at least, industry experts suggest that these historic prices are here to stay and may rise significantly higher in the years ahead. These developments have transformed the dynamics of the Australian uranium industry and have changed the dynamics in which approval for new mining operations must be considered. Now more than ever Australia is in the unique position to reap the economic benefits of our current uranium capacity and play a lead role in ensuring that uranium can be used only for peaceful purposes.

As a major seller of uranium in world markets, we must also accept responsibility for ensuring that uranium, wherever its source, is not diverted into the production of nuclear weapons or used for other military applications. This is a responsibility in which Australia, as a holder of the largest reserves of uranium, must take a lead role. For this reason uranium is more than simply a commodity export. Uranium policy is a fundamental aspect of foreign policy. Australia and the world cannot afford a no-holds barred approach to the sale of uranium. Our policy needs to balance all of the various economic, security and environmental concerns surrounding uranium exports. To get this balance wrong would be grossly damaging to Australia’s national interest and indeed to that of the world.

There are significant substantial concerns about security and safety issues. As many members of the House would be aware, the global non-proliferation regime is in disarray. If Australia is to be a reliable and, most importantly, a responsible supplier of uranium to the world, then clearly we will need to exercise leadership in getting the global non-proliferation regime back on track. The Howard government has been sadly lacking in this regard.

I would like to draw the attention of the House to a recent report by the Australian Strategic Policy Institute on Australian uranium exports and security. In this report, ASPI examines in some detail the safety and security issues surrounding uranium exports. The report notes that Australia has for decades been a responsible exporter of uranium and a very strong advocate of international controls on nuclear technology and materials. The report also notes that any increased role in the nuclear industry will be via an approach that also emphasises security.

Australia must now work to ensure that it is well understood that our reliability as a supplier of uranium is contingent on all of our customers pulling their full weight in strengthening the integrity of the non-proliferation regime. Australia’s uranium export policy must have three simple tests: firstly, potential buyers must accept the nuclear non-proliferation treaty; secondly, they must accept the world’s strongest safeguards for the peaceful uses of uranium; and, thirdly, Australia must lead a new diplomatic initiative against nuclear non-proliferation, which includes a review to strengthen the nuclear non-proliferation treaty.

Australia stands in a unique circumstance to influence and enhance the effectiveness of the nuclear non-proliferation treaty. Australia should aim to do nothing less than apply the leverage over the global non-proliferation regime that our resources have afforded us. In this way, we can honour our obligations and advance our opportunities. The recommendations contained within this report, if adopted by the government, can contribute to achieving this result.

As I stated previously, as nuclear power generation is likely to expand around the world this century, safeguard concerns are only going to intensify, so it is a fundamental duty for uranium producing nations which will benefit from this expansion to lobby for the strengthening of safeguards. Most importantly, this means delivering the level of funding deemed necessary by the International Atomic Energy Agency to perform its safeguard duties.

Over the past 20 years, the IAEA safeguards department has experienced little real growth, despite a significant increase in the amount of nuclear materials and facilities placed under safeguards. As the Director General of the IAEA, Mohamed ElBaradei, has stated, the IAEA safeguards department has a budget comparable to that of the Vienna police force. In this age of international terrorism, this is simply unacceptable. Not only does the IAEA’s funding shortfall prevent the training of new inspectors but also it prevents the IAEA from purchasing advanced satellite monitoring technology, investing in research and development, constructing its own state-of-the-art scientific lab for particle analysis and, most significantly, it constrains the degree to which the IAEA’s nuclear safeguards are perceived to be effective by the international community. While it is recognised that one of the greatest threats to international and national security is nuclear terrorism, until this concern is translated into dollars and cents, the IAEA will not be able to deal effectively with this danger. Therefore, the report recommends that Australia take positive action to address this shortfall.

Another way in which the committee has recommended that nuclear safeguards be strengthened is through its call for increased funding to be allocated to the Australian Safeguards and Non-Proliferation Office’s safeguards support and international outreach programs. These programs have provided much valuable support in assisting the IAEA to develop safeguard concepts, equipment and procedures as well as helping other nations in the Asia-Pacific region to fulfil their non-proliferation obligations. Unfortunately, the programs are constrained by a very restrictive budget and are significantly smaller than the safeguard support programs operated by other major uranium producers, such as Canada. By significantly increasing the funding allocated to the Australian Safeguards and Non-Proliferation Office’s safeguard support and international outreach programs, Australian experts and officials can further enhance their role in aiding countries within our region to improve their safeguard capabilities and ensure that effective safeguards are being applied among consumers of Australian uranium.

One other area of concern raised in a number of submissions made to the inquiry regarded the starting point of the IAEA safeguards. Currently, the IAEA only applies safeguards after uranium is converted into a form that is deemed to be strategic, which is generally considered to be the conversion of natural uranium ore concentrates into uranium hexafluoride gas. What that essentially means is that, when Australian drums of uranium yellowcake are first shipped to China, they will pass through a conversion facility not covered by the IAEA safeguards. While Iran’s continuing development of enrichment technology and general flouting of the nuclear non-proliferation treaty have prompted the IAEA to revise the starting point for safeguards for non-nuclear weapon states, no likewise revision has been sought for the weapon states. Nuclear safeguards are essentially a means of developing trust between nations regarding peaceful uses of nuclear fuels and technologies. Undoubtedly, that trust could be expanded significantly for uranium supplying nations such as Australia if all conversion facilities were brought under international supervision.

In the proceedings of the committee’s inquiry some interesting submissions were received concerning the development of thorium reactors. This is an area of nuclear research still in the developmental stage, but much of the evidence heard on the issue suggested that the research was promising. Some experts in the field have even suggested there is probably more energy available from the use of thorium in the minerals of the earth’s crust than most uranium and fossil fuels. As with uranium, Australia poses large quantities of thorium, yet unlike uranium, thorium has the distinct advantage that it cannot be rendered into a form useable for weapons.

As I stated in the House, there is another very important and worthwhile reason for using thorium, and that is that Western Australia has a very large reserve of it.

Paul Neville (Hinkler, National Party) Share this | Link to this | Hansard source

And it doesn’t last as long either.

Kim Wilkie (Swan, Australian Labor Party) Share this | Link to this | Hansard source

It does not last as long, as stated by the member opposite. So essentially we believe that this would cut the nuclear proliferation risk and take it straight out of the issue of nuclear power. So while there is clearly a long way to go in the research and development of thorium based reactors, this is one area of research in which the committee believes Australia should invest its efforts heavily.

I commend the report of the inquiry to the House and thank all committee members for their efforts to ensure that this report is soundly based and presents a sensible suite of recommendations to the government. I would also like to thank the committee secretariat again for their hard work in supporting the deliberations. I commend the report to the House and call on the government to implement the initiatives and recommendations that are made within it.

Debate (on motion by Mr Neville) adjourned.