Minister for Energy & Resources

Gary Gray

Speech to Australian Uranium Association



06 June 2013

Kurrajong Hotel 8.30am

Thank you for your warm welcome and for the opportunity to discuss the uranium  industry's challenges and opportunities.

I acknowledge the traditional custodians of the land on which we are meeting, the  Ngunnawal people, and particularly welcome those who may be attending today's  event.

A short history of uranium mining in Australia

Australia's mining history is rich and varied and so it is with uranium. The first  significant uranium discoveries were in South Australia; at Radium Hill in 1906, and  Mt Painter in 1910.

In the 1930s ores were mined at these places to recover radium for medical  purposes, with uranium as a by-product.

The first significant pure uranium mining began in the Northern Territory at Rum  Jungle in 1949, and at Coronation Hill in the South Alligator Valley, in 1953.

Between 1954 and 1971, Rum Jungle produced around 3,530 tonnes of uranium  oxide and over 20,000 tonnes of copper concentrate.

In Queensland, uranium was mined at Mary Kathleen in 1954 and Westmoreland in  1956.

The Atomic Energy Act, passed in 1953, gave the Commonwealth total control over  uranium in the territories, and control over state uranium for defence purposes.

One of the early tasks of the Australian Atomic Energy Commission, now known as  the Australian Nuclear Science and Technology Organisation, or ANSTO, was to  mine and supply uranium to Britain and the United States.

This pioneering period for nuclear energy in the post-war period soon gave way to  rapid growth through the 1970s, as nuclear power became a significant part of the  world's energy supply.

This phase of uranium mining was an important catalyst for the development of the  sophisticated environmental management systems that exist today-and these  systems now apply to all areas of mining activity.

Prior to uranium and the 1970s, mining projects in Australia did not consider  environmental impacts until after the resource had been mined out, if ever.

We've come a long way since then and now the environmental impacts of mining, of  any mining for that matter, are closely regulated.

The Fox Report was instrumental in this change.

Chaired by Justice Russel Fox, it was established in 1975 to inquire into  environmental aspects of a mining proposal by the then Australian Atomic Energy  Commission and Ranger Uranium Mines, to conduct a detailed examination of the  environmental impacts of uranium mining.

This study was important because, in addition to assessing the proposed Ranger  mine, it addressed the key question as to whether uranium should be mined in  Australia.

Critically, the Fox Report concluded that the mining and milling of uranium, properly  regulated and controlled, could be an important part of Australia's resources sector.

The Fox Report produced the early regulatory and environmental framework we now  use not just for uranium mining, but for all forms of mining.

From it flowed Australia's world's best practice environmental regulation, monitoring  and safety standards. It did nothing less than provide the way forward for the  expansion of this important industry.

And so in 1975, Australia entered a new era of uranium mining.

Kakadu was proclaimed a national park, the Ranger and Narbalek uranium mines  were established and significant additional wealth created for the people of the  Northern Territory and Australia.

No find better demonstrates this new era than the discovery at Olympic Dam in  1975.

The Olympic Dam ore body has no outcrop. It lies 350m below the surface of the  desert.

It was detected by geophysical exploration - geologists looking at printouts of  anomalies in the earth's magnetic field, wondering if they might indicate the presence  of mineralisation.

It is the world's largest known uranium deposit.

This experience and achievement has enabled Australia to become one of the  world's largest producers and exporters of uranium, an achievement of which we  should all be proud.

The existing policy environment and the need for expansion

Australia has the world's largest known uranium reserves, with 33 per cent of the  world's reasonably assured resources.

We are also the world's third largest uranium producer, behind Kazakhstan and  Canada.

However, we cannot rest on our laurels.

In 2012, production from our uranium mines rose more than 17 per cent, to over  8,000 tonnes.

However this was well below production between 2003 to 2009, when annual  production ranged between 9,000 and 11,000 tonnes.

The Australian Government supports and encourages uranium mining.

The Government's Energy White Paper, released last year, acknowledges our  potential to be the world's leading uranium supplier, with our extensive uranium  resources, mining expertise and leadership role in global weapons non-proliferation  and safeguards regimes.

There is also a significant role for uranium to play in helping the world address the  issue of climate change.

In 2009, the Australian Academy of Science estimated that 10,000 tonnes of  exported Australian uranium replaces other power sources generating 400 million  tonnes of carbon dioxide.

To put this in perspective, Australia's total CO2 emissions in 2012 were roughly 550  million tonnes.

The uranium industry must recognise and embrace the opportunities that exist for  producers as global energy demand rises.

Industry needs to commit to further development of new projects to ensure that our  uranium production meets global demand, particularly as demand for uranium in  2013 is likely to surpass availability of supply.

Uranium exploration and mining has particular characteristics that make its  exploitation more complex.

One issue is the radioactivity - albeit low level - associated with uranium oxide, which  means that the industry has faced some unique challenges.

Primarily, a rational evidenced-based approach must be used to address the  misinformation and fear-mongering that plagues the public debate on uranium  mining.

Government and industry must continue to work closely together to ensure that  commercial and regulatory actions continue to represent best practice.

The mining, transport and processing of uranium must be done in a way that  minimises environmental impacts, and addresses safety and security concerns.

In 2009, after a review of the operations of the Uranium Industry Framework to work  with industry, the Federal Government established the Uranium Council.

The Council's mission is to ensure the progressive and sustainable development of  uranium exploration, mining, milling, transport logistics and export establishing  world's best practice standards.

The Council is chaired by Mr Mark Chalmers, and is supported by my Department.

The Council has made significant progress towards a nationally consistent approach  to the management of uranium.

This national regime is vital to securing a strong and stable industry, and to send a  clear message to the broader community that this is an industry that is serious about  safety, sustainability and social responsibility.

Important initiatives such as: the Australian National Radiation Dose Register, work  to collate existing data on protecting flora and fauna in Australian uranium mining  environments, the Guide to Safe Transport of Uranium Oxide Concentrate, and the  Uranium Transport Strategy have also been initiated and progressed by the Council.

This work demonstrates and contributes to world's best practice approach taken by  Australia in the areas of radiation and environmental protection, and the safe  transport and handling of uranium.

The Government has also placed uranium on the agenda of the Standing Council on  Energy and Resources, SCER, which I chair.

I expect that the Uranium Council's Transport Strategy will be submitted to SCER for  endorsement in the near future.

International environment and the opportunities for expansion

Post-Fukushima we have seen uranium reach its lowest spot price in five years, at  around US$41 per pound.

However, the two fundamental drivers of nuclear power, namely increased energy  demand from growing populations, and the need to reduce greenhouse gas  emissions, remain changed.

Nuclear power currently provides around 13 per cent of the world's electricity,  through 435 reactors operating in 30 countries.

In 2013 alone these reactors will require over 66,000 tonnes of uranium.

But with current global mine production at only 55,000 tonnes, the shortfall is largely  being met by secondary sources, such as the re-processing of highly enriched

weapons grade uranium from the former Soviet Republics. This program is set to  end this year, and it will be interesting to see the effect this will have on the market.

Worldwide, a further 66 nuclear reactors are under construction. Two-thirds of these  new builds are in Asia. Many more reactors are in the pipeline.

China and India alone have a total of 226 reactors slated for construction over the  next two decades.

The significance of growing demand in China and India cannot be over-emphasised.  By 2034, demand for electricity in China will have grown by more than the current  electricity demand of the United States and Japan combined.

In India, in 2007 around 412 million people were living without adequate access to  electricity. India will require more electrical energy for its households and, for  business if it is to lift its population out of poverty. For India to develop and prosper, it  will need Australian uranium producers to step up.

Australia supplies around 22% of China's uranium demand, and negotiations have  commenced with India on a bilateral safeguards agreement, which will pave the way  for significant exports in the future.

Australia's existing stringent bilateral safeguards agreements with other countries  specify that Australian uranium, and nuclear material derived from it, must be used  exclusively for peaceful purposes, in civilian nuclear fuel cycles.

Australian uranium and nuclear material derived from it is also protected in  accordance with strict internationally agreed standards for physical security. These  agreements ensure that countries to which Australia sells uranium are committed to  International Atomic Energy Agency safeguards and international nuclear security  standards.

Under these agreements, countries receiving uranium must also report on their use  of Australian nuclear material, and seek Australian consent for any enrichment,  reprocessing, or third-party transfer.

A bilateral nuclear safeguards agreement with India would impose these high  standards and ensure Australian uranium remains used solely for peaceful purposes.

Australia is a strong supporter of the nuclear non-proliferation regime, working  closely with the International Atomic Energy Agency to improve the operation and  effectiveness of the international safeguards system.

Australia also welcomes global initiatives to strengthen nuclear safety, such as the  IAEA Action Plan on Nuclear Safety.

These actions are necessary to ensure the ongoing support for nuclear energy by  communities and therefore are essential to the industry as a supplier of uranium.

The Australian Government has also taken other steps, to improve access to  international markets for our uranium.

In November 2010, the Australia-Russia Nuclear Cooperation Agreement came into  force, allowing Australian uranium to be used in Russia's civil nuclear facilities. A trial  shipment of one container of uranium was made in September last year.

Domestic challenges and successes in expansion

Australian production of uranium oxide is projected to increase by an average 17 per  cent each year, to reach nearly 21,000 tonnes in 2019-20.

All production is expected to be exported.

But there still remain challenges - challenges that must be met so that exports of  uranium can meet global demand.

2012 saw the acquisition by the Canadians, Cameco, of the Western Australian  Yeelirrie deposit from BHP Billiton, and a decision by Cameco - driven by the  currently depressed spot price - to halt the feasibility study on its other WA project at  Kintyre.

In August 2012, BHP Billiton announced that it would no longer proceed with its  proposed Olympic Dam Expansion. Citing market conditions, including subdued  commodity prices and higher capital costs, the company indicated that it would  undertake further studies to develop a less capital-intensive more cost-efficient and  appropriate open pit design.

BHPB has indicated that it will continue with site preparation and engineering works,  and test pilots of new technologies to assist with the ongoing design of the  expansion.

In South Australia, the Four Mile joint venture project 500km north of Adelaide is at  an advanced stage and was expected to be Australia's fifth operating mine, but  disputes between the parties remain unresolved, and production could still be some  way off.

In the Northern Territory, the Ranger Three Deeps Project has been referred to the  Commonwealth and NT Governments for environmental approval. The deposit  contains an estimated resource of 34,000 tonnes of uranium oxide. A decision on the  viability of the project is expected to be made in late 2014.

ERA has publicly acknowledged that development of the Three Deeps Project will  require the support of the Mirarr Traditional Owners.

In the past two years there have been other project developments and acquisitions,  as legislative and policy changes in some jurisdictions have enabled new activity.

Australia's fourth operating mine, the Honeymoon mine in South Australia, has  commenced exporting. A number of other projects are also in the pipeline.

In my own State, Western Australia's most advanced project, Toro Energy's Wiluna  project, has now received State and Federal environmental approval, and looks like  it destined to become WA's first operating uranium mine.

In March 2012, the NSW Mining Legislation Amendment (Uranium Exploration) Bill  was passed by the NSW Parliament, lifting the ban on uranium exploration in the  state.

The passage of this Bill will enable the state's resources to be fully tested and  exploited. The NSW Government invited expressions of interest to apply for  exploration licences, and received 39 responses.

In Queensland, the State Government announced in October 2012 that uranium  mining would be permitted in that state, and the establishment of an implementation  committee to oversee the recommencement of mining.

That committee considered, among other things, how to implement world's best  practice environmental and safety standards, and delivered its report to the State  Government in March this year.

Queensland's three most promising uranium deposits lie inland from Townsville, in  the Mount Isa region, and in the Gulf region near the Northern Territory border.

These deposits have been well studied and tested by various owners over a number  of years.

All these developments are positive developments for the uranium industry, and it is  important that the industry now builds on this solid foundation to maximise the  opportunities available.

Investment by industry now in areas such as radiation skills training will pay  dividends in years to come.

We as a Government know that effective engagement with the uranium industry is  vital in this period of industry expansion.

I mentioned earlier in my address the establishment of the Uranium Council in 2009.

The Council works to remove impediments to the development and growth of an  internationally competitive Australian uranium industry.

Through the Council, significant progress has been made towards the important goal  of a nationally-consistent approach to the management of uranium.

Such consistency is vital to secure a strong and stable industry, and to send a clear  message to the broader community that this is an industry that is serious about  safety, sustainability and social responsibility.

Conclusion

Uranium in Australia has come a long way since Radium Hill and Mount Painter a  century ago.

It has progressed even further since the Fox Report.

The demand for uranium worldwide will continue to grow. In this room we have the  capability and experience to satisfy that demand, in a way that is both sustainable  and competitive.

Let's continue to work together to fulfil the great potential that lies ahead.

Media Contact:  John Arthur - 0408 991 261



