China warns on uranium
By Andrew Trounson
02dec05
CHINA'S experience of massive iron ore price hikes in the past year would make it wary of where it sourced resources - including uranium - to feed its industrial boom, the country's Australian ambassador warned the mining industry yesterday.
Madame Fu Ying told Australian miners that Australia needed to show it could be a reliable supplier of uranium if it wanted to capitalise on an expansion of China's nuclear power capacity.
Addressing a packed audience of 570 mining industry figures at the Melbourne Mining Club, Madame Fu said China was still feeling the pain from being forced to swallow huge hikes in Australian iron ore and coal prices, and was now more wary of where it sourced the massive supplies of raw materials it needed to feed its fast-paced industrialisation.
While the Federal Government is actively promoting an expansion of uranium mining, the industry is weighed on by political differences with resource-rich Western Australia and Queensland maintaining bans on uranium mining. Earlier this year Canberra was forced to flex its federal powers to stop a ban in the Northern Territory.
Madame Fu said China needed to take account of the "political environment" within supplier countries. "We don't want this trade to be interrupted by other factors."
Madame Fu said China needed to ensure that its sources of raw materials were reliable. But also in a clear message to the many Rio Tinto and BHP Billiton mining executives in the audience, she said China also wanted its suppliers to be reasonable on price demands.
In response to a question about the potential for China to take Australian uranium, Madame Fu said China wanted reliable suppliers.
"The iron ore price rise in China has become such a painful experience that China has become very nervous about depending (on other countries and mines)," she said.
While she noted that other countries were approaching China to supply uranium, there was no doubt China was keen on Australian uranium. Chinese companies took a close look at buying WMC's Olympic Dam mine in South Australia, a resource that alone accounts for one-third of the world's known uranium reserves. The mine was acquired by BHP Billiton as part of its takeover of WMC.
As China ramps up its power capacity it is aiming to double the proportion sourced from nuclear energy to 4 per cent by 2010. While it has enough uranium resources to support its nuclear weapons program, Madame Fu said China would need to import uranium to meet its power demands.
Before any uranium can be sold to China, the two countries need to complete talks on a safeguards agreement that would ensure Australian uranium is used only for peaceful purposes.
Madame Fu added to the increasing rhetoric accompanying the current iron ore and coal price talks in Japan and Asia, claiming that miners should tone down their price demands, given falling steel prices.
She complained that this year's 71.5 per cent hike in annual iron ore prices had put enormous pressure on the country's steel industry, with some smaller companies facing bankruptcy.
"We are hoping the resource-producing companies will notice that factor and ease their pressure on driving prices for the iron ore."
But miners Rio and BHP are arguing for further price rises, citing tight iron ore supplies and continued high spot prices.
They are also keen to secure increases to underwrite the billions of dollars they are investing in expanding their production in Western Australia's Pilbara.
Madame Fu said China was seeking to be more efficient in its use of raw materials. But miners' faith in China's voracious demand will have been strengthened on hearing that China is aiming to increase per capita GDP to $US1600 by 2010 from $US800 in 2000. Madame Fu also noted that China was aiming to increase housing space for its 1.3 billion people by one square metre per person per year. |
