Client Update: A new market for Australian uranium
7 October 2014
In brief: The Australian Government has signed an agreement with India for the sale of uranium, and has now made the agreement publicly available. Partner Richard Malcolmson (view CV), Senior Associates Emily Gerrard and Anna Vella and Lawyer Jayde Geia report on the agreement and its implications.
The Treaty on the Non-Proliferation of Nuclear Weapons (NPT) is the cornerstone of the international nuclear non-proliferation regime. The NPT entered into force in 1970, with Australia ratifying the treaty in 1973. The only states not to have joined the NPT are India, Israel, Pakistan and South Sudan.
The Australian Safeguards and Non-Proliferation Office (ASNO) is Australia’s national safeguards authority, responsible for ensuring the performance of Australia’s safeguards and non-proliferation obligations under the NPT and for facilitating International Atomic Energy Agency (IAEA) safeguards activities in Australia.
Since 2012, the Australian Government's policy has been that Australian uranium can only be sold to countries with which Australia has a nuclear cooperation agreement. This is intended to make sure that countries are committed to peaceful uses of Australian uranium. Those countries must also have a safeguards agreement with the IAEA, including an 'Additional Protocol' which enables the IAEA to inspect declared and possible undeclared nuclear activities and sites, and obtain access to information.
This change of position opened the way for the possibility of uranium being exported to India, even though India is not a signatory to the NPT. India is a member of the IAEA and entered into a safeguards agreement and additional protocol with the IAEA in 2009. India is one of the largest energy consumers in the world, and energy demands in the country continue to increase. India's future energy requirements are expected to grow by 95 per cent by 2030.1
The 'Agreement between the Government of Australia and the Government of India on Cooperation in the Peaceful Uses of Nuclear Energy' (the Cooperation Agreement), signed in September 2014, is the culmination of negotiations which began in 2012.
Negotiations between Australia and India on a bilateral civil nuclear cooperation agreement commenced in October 2012, with the first round of face-to-face discussions being held in March 2013 in New Delhi. The process concluded with the signing of the Cooperation Agreement by the Australian and Indian Prime Ministers on 5 September 2014.
The Cooperation Agreement will make India the first non-NPT signatory to receive uranium from Australia. However, in light of India's rigor in ensuring the separation and protection of its military and civil nuclear facilities, over the past 10 years the United States, Canada, France and Kazakhstan have also entered into similar agreements to supply uranium to India for use in its civilian nuclear energy program.
While shipments of Australian uranium to India are likely to be some time away, Australian uranium could become a key source of energy for India in the long term.
The Cooperation Agreement will be implemented by ASNO and the Nuclear Controls and the Planning Wing of India's Department of Atomic Energy.
In summary, the Cooperation Agreement sets the framework regulating each country's use of uranium supplied pursuant to it and confirms that each party is committed to the peaceful supply and use of Australian uranium. Australian uranium is to be used for civilian purposes only.
The Cooperation Agreement requires Australia and India to:
- continue existing safeguard agreements and additional protocol agreements with the IAEA, which strengthen the effectiveness of the safeguards system for non-proliferation objectives and authorise the IAEA to inspect nuclear activities and sites, and obtain access to related information;
- ensure that nuclear reactors and equipment for reactors, non-nuclear materials for reactors (such as nuclear grade graphite) and by-products the subject of the agreement are used only for peaceful and non-explosive provisions;
- exchange information annually about the disposition of tritium (which is produced as part of the nuclear fuel cycle but is also used as a component in nuclear weapons) for peaceful purposes;
- ensure the implementation of adequate physical protection measures in relation to items subject to the Cooperation Agreement (such as nuclear material, non-nuclear equipment and technology transferred between the parties);
- obtain assurances and the written consent of each other before items subject to the Cooperation Agreement can be re-transferred to a third party; and
- establish and maintain a system of accounting for, and control of, items subject to the Cooperation Agreement.
The Cooperation Agreement:
- 'calls up' other cooperation agreements to which India is a party. For example, it enables India to reprocess and alter nuclear material supplied by Australia in dedicated facilities under IAEA safeguards, as described in the 'Arrangements and Procedures' agreed between the United States and India pursuant to their 2010 cooperation agreement concerning peaceful uses of nuclear energy; and
- creates a framework for the trade of nuclear material between Australia and India and, where appropriate, between India and third parties (subject to India complying with IAEA provisions and safeguards).
In addition to the supply of uranium, other peaceful uses of nuclear energy under the Cooperation Agreement may include:
- production and application of radiation in industry, agriculture, medicine and the environment; and
- nuclear safety, radiation and environment protection and management of radioactive waste.
Cooperation in these areas and activities may be undertaken through the exchange and training of personnel, technology transfer, provision of technical services and assistance and joint research and/or development projects.
The Cooperation Agreement is not yet in force, but will commence once Australia and India have notified each other in writing that all their respective domestic requirements have been completed. For Australia, this requires the Cooperation Agreement is to be tabled in both houses of the Federal Parliament and considered by the Joint Standing Committee on Treaties.
The Agreement will remain in force for 40 years and automatically renew for 20-year periods. Either country, however, may terminate the Cooperation Agreement by giving one year's written notice.
The Cooperation Agreement resembles arrangements previously agreed to by the United States and India during the George W. Bush Administration and facilitated by United States legislation in 2008.
While the Cooperation Agreement charts a new direction for Australia's uranium sector in that India is not a signatory to the NPT, it is similar to other arrangements concluded with Russia and the United Arab Emirates (UAE) in recent years. Australia is a party to 22 bilateral nuclear cooperation agreements, which cover 39 countries (as one of these agreements is with the atomic energy agency of the European Union).
The Australia-Russia nuclear cooperation agreement came into force in November 2010, with Australia and Russia conducting a trial shipment of Australian uranium to Russia in September 2012. After determining the trial to be a success, Australian and Russian officials met in March 2013 to consult on practical arrangements for the implementation of the nuclear cooperation agreement. However, on 1 September 2014, Prime Minister Abbott announced sanctions preventing the further export of uranium to Russia due to the ongoing Russian threat to the sovereignty and territorial integrity of the Ukraine.
The nuclear cooperation agreement between Australia and the UAE came into force in April 2014. The agreement provides for the peaceful uses of nuclear material in the UAE’s civil nuclear power program and nuclear-related activities. In this way, the UAE agreement mirrors provisions in many nuclear cooperation agreements to which Australia is a party.
- Independent Strategic Analysis of Australia's Global Interests 'Strategic Analysis Paper, Meeting India's Energy Requirements in 2030' Lindsay Hughes 20 June 2013.
- Richard MalcolmsonPartner, Sector Leader, Mining,
Ph: +61 2 9230 4717
- Chris SchulzConsultant,
Ph: +61 3 9613 8772
- Ben ZillmannPartner,
Ph: +61 7 3334 3538
- Jodi ReinmuthPartner,
Ph: +61 8 9488 3702
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