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Howard: China uranium deal 'close'

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During Howard's visit to China in April 2005, he and Wen agreed to negotiate a free trade agreement.

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CHINA AND ENERGY

• In 2004 China consumed 2.17 trillion kilowatt hours (kWh) of electricity, with consumption projected to rise 4.3 percent per year until 2025.

• China became the second-largest petroleum consumer in 2003. In 2004 it had a total demand of 6.5 million barrels per day (bpd). The U.S. Energy Information Administration (EIA) predicts consumption will reach 14.2 million bpd by 2025.

• Coal comprises 65 percent of China's primary energy consumption. In 2003, 1.53 billion short tons, or 28 percent of the world total, was consumed by China. The EIA predicts growth in consumption will average 6.2 percent per year from 2002- 2005.

• Natural gas currently accounts for only around 3 percent of total energy being consumed in China, but consumption is expected to nearly double by 2010.

Source: Energy Information Administration, CIA World Factbook.

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SYDNEY, Australia (CNN) -- An agreement to sell Australian uranium to China could be concluded during a visit by Chinese Premier Wen Jiabao to Canberra in the next week, Australian Prime Minister John Howard said Tuesday.

Wen is due to arrive in Australia on Saturday, April 1 and will leave on Tuesday April 4.

Howard told a news conference in Canberra the two sides were "making good progress" in negotiating a nuclear energy deal.

"It's possible that the discussions could be satisfactorily concluded so that something could be said or signed when the Chinese premier visits Australia next week," he said.

China wants to use more nuclear energy to power its fast-growing economy and to reduce its energy dependence on coal and oil.

Australia holds about 40 percent of the world's known low-cost uranium deposits and agreed in principle during a visit by Howard to China in April last year to work on a nuclear safeguards agreement that would permit sales of uranium to China for peaceful purposes.

Plans to negotiate the nuclear cooperation agreement with China were confirmed by Australian Foreign Minister Alexander Downer last August (Full story).

A nuclear deal would augment a broader Australia-China free trade agreement that is now under negotiation.

Exploration move

Howard also noted renewed speculation in Australian media Tuesday that there was also likely to be an agreement enabling Chinese companies to explore for and mine uranium in Australia.

China apparently asked in February last year if Australia would allow Chinese involvement in uranium mining and exploration, and was told there would be no objection at the federal government level, according to a newspaper report last October.

Under a nuclear safeguards agreement, Australia would need to accept Chinese assurances that any uranium exported from Australia would be used for peaceful purposes only, and that it would comply with the international nuclear Non-Proliferation Treaty (NPT).

China is a signatory to this treaty, while India -- another suitor for Australian uranium -- is not.

But following the historic nuclear agreement between India and the United States reached during the visit to New Delhi earlier this month by U.S. President George W. Bush, there have been renewed calls for Australia to end its ban on uranium sales to India (Full story).

Australia has said it would adhere to its present policy of no sales unless New Delhi signs the NPT. But Howard has left open the door for a later review of that position.

Before any Australian uranium can be exported to China, it will need approval from indidivual state and territory governments, which are responsible for mining licences and exploration.

Three mines

There are now three uranium mines operating in Australia -- two in South Australia (BHP Billiton's Olympic Dam and Heathgate Resources' Beverley) and one in the Northern Territory (Rio Tinto's Ranger). Heathgate is owned by the U.S. company General Atomics.

Olympic Dam, acquired by BHP Billiton as part of its $6.5 billion takeover of WMC Resources in 2005, was visited by China's Ambassador in Canberra, Fu Ying, on 8 April 2005, 10 days before Howard's visit to China to announce the start of negotiations on a free trade agreement.

The first exports for China would most likely come from the Ranger mine. Another 12 companies have licences to explore for uranium in the Northern Territory.

Currently, the buyers of Australian uranium are the United States, with a 39 percent share, followed by Japan and the EU with 25 percent each, South Korea 10 percent and Canada 1 percent.

Total exports are worth about A$500 million ($355 million), but China's entry could see that figure reach A$1 billion ($710 million) by 2010.

One constraint is that the opposition Australian Labor Party, which controls the state and territory governments, has a policy of having only three uranium mines operating in Australia.

China is already Australia's second-largest trading partner behind Japan. Total merchandise exports grew to Aust. $13 billion ($9.2 billion) in 2004-05, up 30.5 per cent from the previous year, driven by 50 per cent increases in iron ore and coal exports and a 57 per cent increase in copper and copper ore exports.

According to latest government statistics, resources worth about A$7.5 billion account for about 60 percent of total Australian exports to China. Iron ore, alumina, crude petroleum, coal and aluminum top this list.

From 2006, Australia also will begin exporting between A$700 million ($500 million) and A$1 billion ($710 million) of liquefied natural gas (LNG) to the Guangdong LNG project annually, over a 25-year period.

China is the world's second-largest energy consumer after the United States and under its plan to diversify away from fossil fuels, aims to quadruple its nuclear energy production by 2020.

CNN's Geoff Hiscock in Sydney contributed to this report

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