Saturday, 8 September, 2007

by Nabila Ahmed and Jesse Hogan
The Age - Business Day

AUSTRALIAN uranium producers have gained a significant export customer, Russia, but will not be able to fully satisfy its demand for the radioactive metal until state governments end their opposition to new mines, say analysts.

Prime Minister John Howard and Russian President Vladimir Putin yesterday confirmed a deal for Australian uranium to be exported to Russia for non-military use.

The former Soviet nation expects to generate $US3 billion ($A3.63 billion) for its economy between 2008 and 2015 by processing Australian uranium for countries such as Japan and the US.

Hartleys resources analyst Andrew Muir said any deal to sell more uranium was positive for the local industry.

"BHP will be producing considerably more ore from their Olympic Dam expansion … (and) there will be a significant increase in uranium output once that comes on line," he said.

Olympic Dam is one of only three active uranium mines in Australia, and Mr Muir said it would take — "at barest minimum" — two to three years to make other mines operational.

South Australia and the Northern Territory allow uranium mining but Queensland and Western Australia do not.

Hogan & Partners Stockbrokers resources analyst Gary LeBas said there was "absolutely no way" demand for uranium could be met from existing mines.

"It's very well the Federal Government saying we'll sell uranium to them but there's something missing — supply (is determined) by the state governments," he said.

"There's enough red tape in our industry right now to get a goldmine together in this state (WA) without trying to get a uranium mine up and running. It's fairly daunting."