China may be a world champion greenhouse gas polluter, burning off over 2 billion tons of coal a year. But it is also among the countries trying hardest to do something about it. The China National Nuclear Corp (CNNC) plans to build 30 new nuclear power plants by 2020. The aim is to unclog transport bottlenecks, as thousands of coal trucks clank through the sidings, and to cut down on the smog and acid rain that make life a misery in many cities. The nuclear card, along with natural gas, hydro and solar energy and wind farms, has to be played quickly against a background of power shortages bedeviling the economy.
China was a latecomer to the nuclear party. The first baby 300 megawatt reactor went up in Qinshan, south west of Shanghai, in 1991. That was followed by two French-designed units at Daiwa Bay, providing some power to Hong Kong. Now there are nine up and cooking in Guangdong and Zhejiiang provinces. To meet the Beijing target, two new reactors will have to come on stream every year. Fujian, Shandong and Liaoning are each slated to get six 1,000 megawatt nuclear power stations. Joint ventures with overseas power groups are a strong possibility. Certainly, some construction work will go to foreign companies. Westinghouse and Russia's AtomStroyExport are among the bidders for an US$8 billion four-reactor contract. But the bulk of the job will be done by China itself, and it is a formidable undertaking.
Tracking down "yellowcake"
The first challenge is getting hold of enough uranium oxide or "yellowcake," which is the raw material for nuclear power. Almost all of it will have to be imported.
Fortuitously, an abundant source of the material can be found virtually around the corner.
Australia boasts one third of the world's resources of low cost uranium – and it currently digs up only a fraction of the stuff. Under a quirky embargo imposed by a Labor government over 20 years ago, uranium mining in Australia was restricted to a "three mines" rule, which allows the activity at only a trio of sites around the vast continent. The Coalition Government scrapped the policy when it came to power in 1996, but was consistently frustrated by Labor-controlled state governments. Now Prime Minister John Howard has got fed up. He stepped in to take over the issue of uranium mine licenses in the rugged Northern Territory, where he could use Federal authority. And he made it clear that he will push to open up the industry in Western Australia and elsewhere. Within days of that surprise news, the Australian Foreign Minister, Alexander Downer, said negotiations were about to begin on uranium exports to China. Such sales would depend on a formal agreement that the yellowcake supplied would be used only for peaceful purposes.
Australia has such nuclear agreements in place with 36 counties. There seems no reason why China should be an exception.
Australia's uranium reserves are just short of one million tonnes, much more than second-ranking Kazakhstan and twice as big as Canada. Yet it sold only a paltry 9,600 tonnes last year to customers including the US, Japan, the EU and Korea.
The three producing mines are Olympic Dam in South Australia, recently taken over by BHP; the Beverley Mine, a subsidiary of General Atomic of the US; and Ranger Mine in the Northern Territory
There is now every incentive to ramp up production, take a score of old mines out of mothballs and send prospectors scurrying with Geiger counters into the Australian outback.
Only four years ago, a pound of uranium fetched US$7.25 on world markets. Demand from new power plants was stagnant and Russia had dumped hundreds of tonnes of Cold War stock surplus to requirement for quick cash. Highly enriched weapons grade uranium created a stockpile glut.
Hot commodity
Now it is a completely new ballgame. The uranium price has climbed to US$30 a pound with most of the rise coming this year. Rocketing oil prices and pressure on countries to clean up their environmental acts have concentrated minds. Memories of nuclear accidents at Three Mile Island and Chernobyl have faded. When Finland starts building a new nuclear power station later this year, it will be the first in Europe since 1991. President Bush has mooted a nuclear component to his energy policy, which would mean the first nuclear power reactors in the US since the 1970's. India plans to be a major player too.
There are already 440 nuclear power stations dotted around the world collectively supplying some 16% of global electricity requirements.
Australia and China are soon to begin free trade agreement talks to forge even stronger links between the highly complementary economies. Bringing uranium to the table would undoubtedly be welcomed in Beijing.