Howard Urges Australian States to End Uranium Bans

Howard Urges Australian States to End Uranium Bans

Prime Minister John Howard urged Australia’s regional governments to end bans on new uranium mines that prevent the nation from tapping soaring demand for the reactor fuel.

The nuclear power boom provided a “timely opportunity,” Howard said today, releasing a government report that supported an end to the bans, enrichment of the metal for use in reactors and construction of as many as 25 atomic plants in the country.

Australia, with 40 percent of the world’s uranium’s reserves, contributes just 23 percent of global output because miners such as BHP Billiton have been prevented from opening new pits. The bans were introduced in 1983 by the Labor Party, which lost office in 1996 to Howard’s coalition government. Labor controls all eight state and territory governments and the party’s policy will be reconsidered at a conference in April.

“I call upon state governments to end their bans on uranium mining and exploration, which stand in the way of investment, jobs and exports,” Howard said in a statement e-mailed to Bloomberg News.

Prices for uranium, which is used to power plants that supply 16 percent of the world’s electricity, have surged almost fourfold in the past three years. Higher coal, gas and oil prices and pressure to cut greenhouse gas emissions, blamed for global warming, are driving increased use of nuclear power.

Labor Disagreement

Kevin Rudd, leader of the opposition Labor Party at federal level, favors scrapping the prohibition on uranium expansion, while regional leaders such as Western Australia Premier Alan Carpenter want to keep it. South Australia’s Premier Mike Rann supports the expansion of uranium mining, while Queensland Premier Peter Beattie has said he will abide by the decision due to be taken at the party’s conference in April, ABN Amro Holding NV said in a Dec. 19 report.

The party’s position on uranium will be decided before the state and territory leaders meet Howard, 67, during a twice- yearly Council of Australian Governments meeting in Canberra.

Australia may start using nuclear power within 15 years and build as many as 25 reactors by 2020 to meet one-third of the nation’s energy, according to the uranium report ordered by the government and produced by a team led by former Telstra Corp. chief executive Ziggy Switkowski.

Australia’s federal government controls the sale of uranium while state and territory governments administer mining permits. Mining of the metal is limited to three sites: BHP Billiton’s Olympic Dam mine in South Australia; Energy Resources of Australia Ltd.’s Ranger mine in the Northern Territory; and Heathgate Resources’ Beverley mine in South Australia. Heathgate is owned by San Diego-based General Atomics.

Miners to Benefit

A change in policy on uranium would benefit mining companies such as SXR Uranium One Inc. with advanced projects in South Australia and Queensland states, ABN Amro’s report said.

“We believe a change in policy would lead to a re-rating of the Australian uranium explorers and potentially to further consolidation of the sector,” ABN said in the report. “In our view, those explorers with advanced projects will be in the best position to benefit from a potential change in policy.”

SXR Uranium One was in September awarded a license by the South Australian government’s environmental agency to commercially mine the Honeymoon deposit. The company, based in Toronto, said in August it decided to go ahead with the project.

PepinNini Minerals Ltd., based in Sydney, has a potential project in South Australia, while Canada’s Mega Uranium Ltd. and Perth-based Summit Resources Ltd. are among companies with potential projects in Queensland, ABN said.

Summit Gains

Easing the uranium mining ban “would be great for a company like Summit,” said Peter Schiff, chief executive officer of Euro Pacific Capital, which manages about $400 million including Summit shares.

Summit, which said on Oct. 20 it had resumed exploring for uranium in response to higher prices, would “would probably benefit dramatically” from a relaxation of uranium mining, Schiff told Bloomberg Television after Howard’s statement was released. Summit shares gained 9.8 percent, or 27 cents, to A3.03 today, and have risen 436 percent in 2006.

Other uranium stocks have surged, with Energy Resources gaining 111 percent in 2006, while Paladin’s stock has jumped 351 percent this year.

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