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Australia eyes China uranium sales

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Downer said an agreement would be consistent with Australia's position as an energy resources supplier.

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SYDNEY, Australia (CNN) -- Australia plans to negotiate a nuclear cooperation agreement with China so uranium sales can begin, Foreign Minister Alexander Downer said Tuesday.

Downer said the agreement would set up safeguards to ensure Australian uranium sent to China was used only for peaceful purposes.

Australia has about 40 percent of the world's low-cost uranium resources and earns about Aust. $400 million ($300 million) a year from uranium exports, which go mainly to the United States, Japan, South Korea and the European Union.

Under a policy established in 1977, Australia exports uranium only to countries with whom it has a nuclear safeguards agreement. Downer said on Tuesday that Australia already had 19 nuclear agreements covering 36 countries.

China is the world's second-largest energy consumer after the United States and plans to meet some of its projected growth in electricity demand from nuclear energy.

Downer said China wanted to diversify away from fossil fuels and aimed to quadruple its nuclear energy production by 2020.

China, which first raised the possibility of buying Australian uranium last year, is already a big market for Australian resources, including coal and iron ore. It has also agreed to buy LNG, while Chinese companies have taken equity stakes in Australian resources projects.

Downer said opening up the uranium trade to China was consistent with Australia's role as a secure supplier of energy resources.

According to the Melbourne-based Uranium Information Center, in the five years to mid-2005 Australia exported 46,600 tons of uranium oxide concentrate with a value of A$2.1 billion (about $1.58 billion) to 11 countries.

The largest customers for Australia are the United States, Japan, South Korea and the European Union.

Downer said Australian and Chinese officials have held exploratory talks on the proposed nuclear agreement.

China and Australia have already agreed to the formal start of talks on a wide-ranging free trade agreement, following a visit by Prime Minister John Howard to Beijing in April.

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