Friday, 7 September, 2007

by George Lekakis
The Herald Sun

A PUSH by Japan to lock up access to secure uranium supplies will be a key part of a deal expected to be signed this weekend by Prime Ministers John Howard and Shinzo Abe.

Japan is already Australia's second largest uranium customer behind the United States but Mr Abe wants to negotiate a priority supply deal in the face of soaring global demand and prices for the nuclear feedstock.

The imminent deal comes as Japanese investors try to buy into major Australian uranium deposits.

BusinessDaily believes Rio Tinto is planning to sell its world-class Kintyre uranium deposit in Western Australia and has already received strong interest from several Japanese companies.

The Kintyre project is on the edge of the Great Sandy Desert in the Pilbara region of Western Australia and has estimated uranium reserves of 36,000 tonnes.

The deposit was discovered in 1985 by Rio Tinto's exploration arm but has not been advanced because of the WA Government's ban on uranium mining.

Japan has 17 nuclear reactors which generate about 30 per cent of the country's electricity supply.

However, its hunger for a secure and stable uranium supply extends to its role as one of the world's leading suppliers of nuclear power plants.

Toshiba Group is the majority owner of Westinghouse Electric, which is now aggressively marketing its expertise as a builder of nuclear reactors.

Ready access to uranium at predictable prices will be a competitive advantage for power plant manufacturers bidding for construction contracts in big growth markets such as India and China.

Tokyo's Kyodo news agency reported on Wednesday that a uranium deal with Australia to be announced at the weekend may also include a commitment from Japan to help Australia develop nuclear plants in the future if the ban on nuclear generation here is lifted.

Talks between Australia and Japan on forging closer ties on nuclear development have been occurring since last year.

BusinessDaily revealed in March that representatives from Westinghouse visited Australia to discuss "near-term opportunities" with the Federal Government.

Westinghouse spokesman Scott Shaw told BusinessDaily at the time: "Westinghouse is very supportive of Prime Minister Howard's initiatives in Australia and have been closely following events there.

"Westinghouse recently visited Australia to discuss near-term opportunities with the Government and regulatory authorities.

"We have also had inquiries from individuals and groups within Australia pursuing the establishment and development of commercial nuclear power plants for electricity generation."

An indication of the urgent need felt in Japan to negotiate lock-in deals for uranium supplies surfaced last month when Toshiba sold a 10 per cent stake in Westinghouse Electric to Kazakhstan's state-owned uranium company, Kazatomprom.

In return, Toshiba was paid $US540 million and given a long-term guarantee on uranium supplies.

Kazatomprom boss Moukhtar Dzhakishev said at the time: "New reactors to be built by Westinghouse will have a guaranteed nuclear-fuel supply."

The Howard Government is also expected to announce a uranium deal with Russia at the weekend.

The development of a stable global framework for promoting nuclear power has emerged as a major focus of the APEC conference.

US President George Bush confirmed on Wednesday that Australia and Canada had been invited to attend the next meeting of the Global Nuclear Energy Partnership in Vienna later this month.

GNEP members include the US, Japan, Russia and France. They are aiming to establish rules for the roll-out and management of nuclear power in OECD countries and developing economies.

But a political storm erupted in Canada overnight yesterday because of the country's participation in the GNEP.

Critics believe uranium exporting nations in the GNEP would be required to take back nuclear waste from international power plants.

The Howard Government is also fending off similar attacks from critics of the GNEP program.

Mr Howard and Foreign Minister Alexander Downer have rejected the claims, insisting that waste is only required to be returned to countries exporting processed uranium.