Russian President Vladimir Putin and Australian Prime Minister John Howard signed the deal during bilateral talks today on the sidelines of the Asia-Pacific Economic Cooperation forum summit now under way in the Australian city of Sydney.

Putin is making the first-ever visit to Australia by a Russian leader.

Speaking at a news conference in Sydney, he said Russia needed uranium to boost its nuclear-generated electricity supplies.

"During the Soviet era, we built about 30 major reactors in nuclear power stations in Russia," Putin said. "In the coming 15-20 years we are planning to build about the same amount, and of course for these purposes we need this Australian uranium. As regards supplies to other countries, if such a need arises, our own resources will suffice."

The deal with Australia, which has the world's largest reserves of uranium, will also help Moscow fulfill its ambitious plans to build and fuel a quarter of new nuclear reactors throughout the world. Russia has agreements to supply nuclear fuel to 13 different countries and currently sells 30 tons of uranium a year to the United States for nuclear fuel.

Under today's deal, Moscow cannot use Australian uranium for military purposes or export it to a third country without Australia's prior written consent.

Concerns Over Iran

But Putin's pledge that the atomic material would not be sold on to Iran has been met with a degree of skepticism.

Critics say Russia could use the inflow of uranium to sell its own atomic resources to rogue states such as Iran, which Western countries accuse of seeking nuclear weapons.

Russia has helped build Iran's first nuclear power plant at Bushehr and has a significant financial stake in Iran's nuclear power program.

But Putin today strongly dismissed concerns about how Russia will use Australian uranium.

"Russia has enough [nuclear] material of its own for the realization of arms programs," he said. "Moreover, the volume of accumulated materials we regard as weapon-grade is excessive. Over the course of many years, we've been selling this enriched uranium to the United States, where we're jointly reprocessing it and selling it on the North American market. So those who speak about the possibility of Russia using Australian uranium for military purposes simply don't understand the issue. Or they're just spreading this thesis deliberately, to hinder the cooperation between the two countries."

The Australian prime minister also sought to soothe worries that his country's uranium could fall into the wrong hands, saying that the atomic fuel sold to Russia would be "subject to very strict safeguards."