There is currently a significant move amongst nuclear fuel cycle participants towards vertical integration, in other words adding value by offering more than just, for example, uranium or enrichment supply. Ultimately, more companies will no doubt seek to offer complete fuel services. With the most extensive uranium deposits in the world, will Australia ever seek to convert or enrich mined production locally? Secondly, in the context of being one of the world’s leading greenhouse gas emitters (per capita) and the need to replace much old coal-fired generation capacity, will power reactors ever become a realistic proposition in Australia?

Although there is a long history of uranium mining in Australia, it has repeatedly failed to reach its true potential owing to political difficulties. Uranium and nuclear matters create a huge amount of interest in Australia, and constraints such as the (now abandoned) ‘three mines policy’, imposed by the Australian Labor Party (ALP) allowed Canada to become the world’s largest producer. Yet Australia’s uranium endowment is unquestionably superior and superb deposits have not, so far, been developed. On purely economic criteria, they undoubtedly should have been. The legacy of the ALP’s phobia about uranium mining still unfortunately survives, as state governments in both Queensland and Western Australia continue to impose moratoria on uranium mine development. It is generally expected, however, that with a change in policy at the federal level, these lingering constraints will soon be removed.

According to the latest (2005) edition of the IAEA-OECD-NEA Red Book, Australia has 38% of the world’s lowest-cost uranium resources (production cost under US$ 40/kg). It is notable that nearly all of Australia’s 714,000 tonnes of reasonably assured resources (RAR) of uranium (production cost up to $80/kgU) are in the under $40/kgU category, demonstrating their sound economic credentials. In November 2007, however, Geoscience Australia released its annual update of Australia’s Identified Mineral Resources, confirming large increases for uranium above the Red Book figures – 34% for the main economic resource categories. For example, the RAR of 714,000tU quoted above are now rated at 953,000tU. This has been due to more recent exploration and development drilling in several locations. About 96% of the RAR is in only six well-known deposits: Olympic Dam (the world’s largest known uranium deposit), Ranger, Jabiluka, Koongarra, Kintyre and Yeelirrie. The upsurge in world uranium prices and the anticipation of the disappearance of political restrictions has certainly led to considerable growth in uranium exploration in Australia. In 2006, more than 200 companies professed an interest, compared with 34 the previous year. Expenditure almost doubled, to A$ 80.7 million ($75.2 million) and has continued to increase since, to A$ 114 million ($106 million) in 2006-07.

With this fantastic resource endowment, Australia has certainly been a major producer, but should have been even bigger. Uranium ores were mined and treated in Australia from the 1950s until 1971. Radium Hill in South Australia, Rum Jungle in Northern Territory and Mary Kathleen in Queensland, were the largest producing mines. Production ceased either when ore reserves were exhausted or contracts were fulfilled. Sales were to supply material primarily intended for US and UK weapons programmes at that time, but some was also used for electricity production. The development of civil nuclear power stimulated a second wave of exploration activity in the late 1960s. Mary Kathleen recommenced production in 1976 but was depleted and closed at the end of 1982. In 1979, Queensland Mines opened Nabarlek in the Northern Territory. The orebody was mined out in one dry season with the ore stockpiled for treatment from 1980 – the mine site is now rehabilitated.

Then the Ranger mine opened in 1981 at a production rate of approximately 3300tU per year and has since been expanded to 5500tU capacity. Ranger is owned by Energy Resources of Australia (ERA), now a subsidiary of Rio Tinto. It is located on aboriginal land in the Alligator Rivers region of the Northern Territory, close to the Kakadu National Park (in fact the Ranger leases are surrounded by the National Park). Ranger is served by the township of Jabiru, constructed largely for that purpose. Aboriginal people receive royalties of 4.25% on sales of uranium from Ranger and the total received is now over $200 million,

During 1988 the Olympic Dam project, then a joint venture of Western Mining Corporation and BP Minerals, commenced operations. This is a large underground mine in central South Australia, producing copper, gold and uranium. Annual production capacity for uranium has been expanded from 1800 to 4500 tU. It is now owned by BHP Billiton, following its 2005 takeover of WMC Resources. The Olympic Dam mine is on formerly pastoral land in the middle of South Australia and a town to accommodate 3500 people was built at Roxby Downs to service the mine.

Following a change in government policy in 1996, three other projects were brought forward. Jabiluka is effectively to be an extension of the Ranger operation, but awaits Aboriginal approval for development. Beverley started operation late in 2000. It is Australia’s first in situ leaching (ISL) mine, licensed to produce 1000tU per year (and it reached this level in 2004). It is owned and operated by Heathgate Resources, an associate of General Atomics in the USA. Thirdly, Honeymoon received government approval to proceed with ISL mine development in November 2001 but has reassessed its ore reserves and is now expected to be operational at 400tU per annum late in 2008. It is owned by Uranium One of Canada.

There are now a large number of plans for both developing additional and expanding current mines in Australia, in the context of rising world demand for uranium, much better prices and the expected final removal of political constraints. The biggest of these is the mooted expansion at Olympic Dam. BHP Billiton is seriously studying the possibility of expanding the operation to as high as 15,000tU capacity per year from 2013-2015, with a capital cost of possibly upwards of $10 billion.

Given such expansion plans and the prospect of Australia at last fulfilling its potential as a uranium producer, could it also add value to its production by also establishing conversion, enrichment and fuel fabrication facilities? About 1200 people are currently employed in uranium mining and at least 500 in uranium exploration, while uranium mines generate about A$21 million in royalties each year, with corporate taxes amounting to over A$42 million per year. These are important numbers but are dwarfed by the magnitude of, for example, Australia’s coal and iron ore sectors. If Australian uranium production doubles towards 20,000tU per year over the next ten years, it would certainly seem reasonable to consider a combined conversion and enrichment facility. To be able to export enriched uranium directly to customers around the world would be a major advance and would save a huge amount of (difficult today) transportation of heavy and (relatively) low value uranium concentrates. Establishing a conversion facility alone would make little sense – these are ideally sited close to an enrichment facility. Bringing enrichment to Australia would no doubt sound the usual non-proliferation alarm bells, but the concept of siting a small number of plants in politically-stable nations with excellent non-proliferation credentials, to supply the world market, is certainly a sound one. One thought is that, if GE succeeds in commercialising the Silex laser enrichment technology originally developed at the Australian Nuclear Science and Technology Organisation (Ansto) near Sydney, then building a plant in Australia would undoubtedly have some attractions. Establishing a fuel fabrication facility is another matter – there is currently excess capacity worldwide in this market and plants tend to be located close to end markets.

Regarding commissioning a power reactor in Australia, this looks rather more unlikely. Coal provides about 78% of Australia’s electricity and this also accounts for most of the 200 million tonnes per year of carbon dioxide (CO₂) emissions from electricity and heat production. In the next 15 years or so, Australia is likely to need to replace the oldest quarter of its thermal generating capacity, simply due to old age. This is at least 8000MWe, practically all coal-fired. If it were replaced by gas-fired plant, there would be a reduction of about 25-30 million tonnes of CO₂ emissions per year but if it were replaced by six nuclear reactors, there would be a reduction of about 50 million tonnes of CO₂. Generating plant to utilise gas is relatively cheap and quickly built, and at the point of use, gas-fired electricity causes only half the greenhouse emission of coal. But it depends economically on low gas prices being maintained many years in the future, while there is also a view that burning gas for power generation is wasteful of a versatile resource.

The previous Liberal federal government was favourable to developing a nuclear programme, but this momentum has seemingly been quickly lost under the new Labor regime. In November 2006, the report of the prime minster’s expert task force considering nuclear power said nuclear power would be 20-50% more expensive than coal-fired power and (with renewables) it would only be competitive if “low to moderate” costs are imposed on carbon emissions (A$15-40 per tonne CO₂). The report said that the first nuclear plants could be running in 15 years, and looking beyond that, 25 reactors at coastal sites might be supplying one third of Australia’s (doubled) electricity demand by 2050.

The Liberal government also announced that it would open the way for nuclear power in Australia by setting up a nuclear regulatory regime and removing any regulatory obstacles which might unreasonably stand in the way of building nuclear power plants. Australia also decided to join the Generation IV International Forum, which is developing advanced reactor designs for deployment. An emissions trading task force report also proposed that Australia should move steadily to implement an emissions trading scheme by 2012.

It remains to be seen how things now develop under the (relatively) new Labor administration, but things generally now look less promising. This is despite its apparently sound environmental credentials (such as immediately signing the Kyoto Protocol when the previous government had refused to do so). Its previous antipathy towards anything to do with nuclear unfortunately remains. Nevertheless, one possibility worth considering is cogeneration. In the light of widespread shortage of fresh water, cooling of any nuclear power plants would need to be by seawater, hence coastal sites would be required. Using waste or surplus heat for desalination and production of potable water, in addition to generating electricity, should be attractive.