Australia, the world's second-biggest uranium exporter, will allow companies including BHP Billiton Ltd. to sell the nuclear fuel to Russia, a day after signing a deal to supply natural gas to China.
President Vladimir Putin, the first Russian head of state to visit Australia, said he hoped the two countries would expand trade and economic ties after meeting with Prime Minister John Howard in Sydney today.
The back-to-back deals with China and Russia highlight demand for fuel in the world's fastest expanding economies. Commodity exports from Australia, the world's biggest shipper of coal and iron ore, may rise by a record for a fourth straight year, the government forecasts.
“Any uranium sold to Russia will be subject to very strict safeguards,'' said Howard.
Australia will supply China with liquefied natural gas in a A$35 billion ($29 billion) deal, Howard said yesterday. Australia earlier this year ratified an agreement paving the way for A$250 million of uranium shipments to China, the world's fastest growing major economy. It last month agreed to sell the nuclear fuel to India, the second fastest.
`Purely Economic'
Putin and Howard said the enriched uranium wouldn't be used by military or sold to Iran, which is under United Nations sanctions for refusing to suspend uranium enrichment. Russia, the world's biggest energy exporter, wanted to import Australian uranium for “purely economic reasons,'' Putin said.
Russia's economy will grow as much as 7.5 percent this year, its ninth annual expansion, as manufacturers and consumers increase production and consumption, the central bank forecasts.
Australia last month said it would sell the nuclear fuel to India under “strict conditions.'' It signed a similar accord with China in January. The nation's uranium exports to 12 countries last year totaled A$529 million.
Since Australia recognized China in 1972, trade between the two has grown from A$113 million to more than A$40 billion last year.
Trade between Russia and Australia stood at A$719 million in 2006, a 65 percent increase on 2005, according to the Australian Department of Foreign Affairs and Trade.
Atomic Fuel
Russia, which has two-fifths of the world's uranium enrichment capacity, needs the metal to process into atomic fuel for a planned 42 extra domestic nuclear reactors by 2030. China plans to add two reactors a year to meet a 2002 target of getting 4 percent of its power from nuclear energy from about 2.3 percent.
Today's agreement, which needs Russian parliamentary ratification, should be completed by next year, Australian Foreign Minister Alexander Downer said last month.
It allows Australian uranium to be used after enrichment in civilian nuclear power plants in Russia. Australia already had an agreement where its uranium could be enriched in Russia for final use in another country.
The two leaders met on the sidelines of the Asia-Pacific Economic Cooperation summit being hosted by Howard in Sydney this week.
Allow Mining
The agreement with Russia may spur Australia's state governments to allow more uranium mining, said Max Layton, a uranium analyst with Macquarie Bank Ltd. in London.
“Who's going to be sending the uranium? Nearly all of Australian production is fully contracted,'' he said.
Australia's three operating uranium mines are located in South Australia state and the Northern Territory, whose governments have indicated they would support new pits.
The state governments of Western Australia and Queensland, controlled by the Labor Party, have so far refused to consider uranium mines, going against an April decision by the party's federal leadership to end its no-new mines policy.
Australia has previously shunned nuclear power, believing it to be dangerous, and uranium mining has been limited to help prevent weapons proliferation. Prime Minister Howard said in April this should change.
BHP Billiton, the world's largest mining company, began talks with Russia's state-owned fuel-trader OAO Techsnabexport late last year on expanding its Olympic Dam mine in southern Australia.
Warheads Fuel
Russia holds 1 million metric tons of uranium, the world's third-largest reserves after Australia and Kazakhstan. The country mined 3,200 tons last year, placing it fifth globally. Russia uses stockpiles and blends down fuel from warheads to meet demand.
Putin traveled to Australia with a delegation of Russian business executives including Alexander Medvedev, deputy chief executive officer of state natural gas monopoly OAO Gazprom and Oleg Deripaska, owner of United Co. Rusal, the world's largest aluminum producer.
Russian companies including Rusal, OAO Magnitogorsk Iron & Steel and Norilsk Nickel, the world's biggest producer of nickel, have invested between $5 billion and $6 billion in Australia, mainly in the mining and metals sector.
